Refinancing a car title loan in California means replacing your current title loan with a new loan agreement that may offer more manageable repayment terms.
Refinancing may get you a lower interest rate, reduce your monthly payments, or adjust your repayment schedule to better fit your budget.
However, a lower monthly payment doesn’t always mean a cheaper loan, especially if you extend the repayment term.
The goal is to make your title loan more affordable and easier to manage, avoid struggling with payments, and reduce the risk of default and losing your car, not simply extend your debt.
Before refinancing, consider whether a personal loan, credit union loan, or another financing option could pay off your existing title loan at a lower cost. Compare them with what your current lender and other title loan lenders offer for a refinance. Review the APR, fees, monthly payments, and total repayment amount to find the option that best fits your budget.
Can You Refinance a Title Loan With 5 Star Car Title Loans?
At 5 Star Car Title Loans, we may be able to refinance a California title loan you already have with us or pay off a title loan from another lender.6 Each application is reviewed individually, and approval is not guaranteed.
Before approving any title loan refinance, we consider your vehicle’s value, how much you still owe on it, your income, and your ability to repay the new loan.5
Important for California borrowers considering title loan refinancing: Under the California Financing Law, qualifying loans from $2,500 to less than $10,000 are subject to an interest rate cap of 36% plus the Federal Funds Rate. Loans of $10,000 or more are not subject to this same rate cap, so borrowing costs can be significantly higher.
Editorial Disclosure: 5 Star Car Title Loans™ is a licensed direct lender, NMLS ID 2253575. This guide is for informational purposes only and is not financial advice. Your loan approval, amount, APR and terms depend on your state’s law, your car and your income.
Key Takeaways
- Refinancing may be possible. Approval depends on your car’s value, loan balance, income, and ability to repay.5
- Lower payments can cost more. On a $2,600 loan, going from 18 to 36 months may save about $70 a month but add about $884 in total.
- California limits the refinance fee. An administrative fee can be charged only once every 12 months, and there is no prepayment penalty.
- Ask your current lender first. See if it can change your terms, then compare what other title loan lenders offer.
- Consider other options. Personal loans or credit union loans may cost less than refinancing.
- Watch the $10,000 line. California’s rate cap for smaller qualifying loans does not apply to loans of $10,000 or more.
- Have your loan details ready. Your current lender’s name and account number, or a payoff statement, lets us request your payoff.
- You can usually pre-qualify in about five minutes.8 If approved, your new loan pays off the old one.
- Behind on payments? Refinancing may still be possible before repossession starts under California law, depending on your situation.9
What Happens to Your Old Title Loan When You Refinance?
When you refinance, your new loan is used to pay off the remaining balance on your existing title loan. Once the old loan is paid off, you start making payments under your new loan agreement.
If you switch lenders, your old lender releases its lien on your vehicle, and the new lender becomes the lienholder on your car’s title.
How Does Refinancing Affect Your Monthly Payments and Total Loan Cost?
Refinancing may lower your monthly payments, but it can also increase the total amount you repay, especially if you extend the loan term. Make sure you understand these costs before committing to a new loan.
For example, let’s compare the monthly payments and total repayment costs for a $2,600 car title loan in California at 36% APR, using different repayment terms:
| Term Length | 18 Months | 36 Months |
|---|---|---|
| Title Loan Amount | $2,600 | $2,600 |
| APR | 36% | 36% |
| Monthly Payment | About $189 | About $119 |
| Total of Payments | About $3,403 | About $4,287 |
Disclaimer: These numbers are only an example, not an offer. Your own rate and payment will depend on your loan amount, term and approval.
Our APRs go up to 150%, and never above the cap your state’s law sets.7 The APR represents the annual cost of borrowing, including interest and applicable finance charges.
What Does California Law Say About Refinancing a Title Loan?
When you refinance, the new loan is a new California title loan, so California’s title loan laws apply to it:
- The new loan’s size sets the rate cap: Your payoff plus any money you take decides which cap applies. Loans under $2,500 have monthly caps from 2.5% down to 1% a month, by balance. These caps are low for the risk a title loan carries, so title loan lenders in California rarely make loans under $2,500.
- Term limits: A new loan of $2,500 to $9,999 must run at least 12 months. The longest schedule allowed is 60 months and 15 days, for loans of $3,000 or more.
- Refinance fee: A lender can charge an administrative fee for a refinance only once every 12 months.
- No prepayment penalty: Paying off a California title loan early carries no prepayment penalty, so paying off your current loan with a new one does not add one.
- Costs shown before you sign: California law requires the lender to show the APR, payment schedule and total cost of the new loan before you sign, so you can compare it with your current loan. With us, every fee is shown in your agreement.
What Changes if Your New Title Loan Is $10,000 or More?
If your payoff plus any money you take adds up to $10,000 or more, the new loan has no state rate cap. At that size, the California Department of Financial Protection and Innovation notes that “lenders can charge unlimited interest rates.”
When refinancing, don’t borrow more than you need. If your payoff is close to $10,000, taking less money can keep the new loan under that line.
Can a New Lender Pay Off Your Current Title Loan?
Yes, in California a new licensed lender may be able to pay off your existing title loan and replace it with a new loan agreement. However, not all California title loan lenders offer refinancing.
Start by asking your current lender if it can offer better terms. You may want to switch lenders if:
- No better terms: Your current lender won’t offer better loan terms.
- Poor service: You’re unhappy with the service, such as unanswered calls or poor customer support.
- A better offer: Another licensed California lender offers a lower APR, more manageable payments, or better overall loan terms.
California requires every title loan lender to be licensed by the Department of Financial Protection and Innovation, so check your current lender and any new one on the DFPI license list or NMLS Consumer Access.
Some lenders call refinancing through a new lender a title loan buyout. The same term is also used when one lender buys another lender’s loans, and in that case your terms usually stay the same.
What Should You Ask Yourself Before You Refinance?
Ask yourself these three questions, and whether a title loan is right for you:
- What is my current loan balance and interest rate?
- Will my new loan, the payoff plus any money left over, be $10,000 or more?
- Do I have another way to pay off my current title loan?
What Do You Need to Refinance a Title Loan With Us?
You need the same items as for any title loan from us, plus, for a loan elsewhere, one more paper:
- Your car’s title, in your name
- A driver’s license, state ID or passport
- Proof you can make the payments5
- Proof of address
- Proof of insurance, with full coverage on most of our loans
- Your car, in person or by photos
- A recent payoff statement, or that lender’s name and your account number
How Do You Refinance a Title Loan With Us?
- Apply to refinance your current loan. You can usually find out if you pre-qualify in about five minutes after completing the online form with your vehicle, personal, and income information.8
- Share your loan details and documents. If your loan is with another lender, we request its payoff amount once you pre-qualify.
If you have your ID, proof of income, title, and vehicle photos ready, we can often complete the review and conditional approval in about 15 to 30 minutes after verifying your information and vehicle.8
- Get fully approved and review the new terms. First, check that you can afford the monthly payment. Not being able to pay is the main reason loans go into default.
Take your time to check the amount, APR and payment schedule, and call us with questions before you sign.
- Sign, and your loan is funded. If your loan is with another lender, we pay it off after you sign. Any money left over goes to you.
Once you repay us in full, we release our lien.
“When you come to us to refinance, your car is not the only thing I look at. I check what you still owe against what your car is worth today, and just as carefully, whether your income can cover the new payment.
I need both to approve the loan. Your car’s value alone is not enough.
A refinance only makes sense if you can keep up with the new loan. A lower payment you still can’t afford only delays a default, so we look for terms that fit your budget.”
Bryan Solis
Head of Underwriting, 5 Star Car Title Loans™
Applying and getting your loan estimate are free, with no obligation to take the loan.3
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What If You Are Behind on Payments or About to Miss One?
You may still be able to refinance your title loan if you’re behind on payments, but your options could be more limited.
It’s best to explore refinancing before your lender begins the repossession process, as refinancing may become more difficult once that process starts.9
If you think you might miss a payment, contact us as soon as possible. We may be able to work with you on a solution, such as refinancing your current loan with more manageable monthly payments.
Keep in mind that any past-due payments and applicable fees may be included in your loan payoff amount, which could increase the amount you need to refinance.
What Happens if a Title Loan With Us Goes Into Default?
If your loan is with us and you stop paying, it goes into default. Because your car secures the loan, we can repossess and sell it under California law.9
After a repossession, California law requires us to send you a notice within 60 days. If we sent that notice and the sale does not cover your balance, you may still owe the rest.
If the sale brings in more than you owe, we must return the extra to you. An unpaid balance can also go to a collection agency.
Frequently Asked Questions
Can You Refinance a Title Loan With Bad Credit?
Yes, you may still qualify. Approval depends more on your car’s value and ability to repay than on your credit score.
No credit check is required to pre-qualify. You’ll receive a free loan estimate to compare with other options. If you decide to proceed, we may run a soft credit check during final approval, which won’t affect your FICO score.
Is There a Limit on How Many Times You Can Refinance a Title Loan?
California law does not limit how many times you can refinance a car title loan of $2,500 or more, as long as a lender approves you.
