Can You Get a Title Loan on a Financed Car?

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November 9, 2024

8 min read

Yes, you can get a title loan on a financed car. The process is more complex than with a fully paid-off car, but can you get a title loan on a financed car? It is possible. In fact, depending on your vehicle’s equity and the lender’s policies, you might be able to secure a title loan for up to $50,000¹.

Key Takeaways

You can get a title loan on a financed car, but the lender becomes a lienholder with legal rights to the vehicle’s title until the loan is fully repaid.
Eligibility for a title loan depends primarily on your car’s positive equity, your stable income, and less heavily on your credit history, making it accessible even if you have bad credit.
The loan amount you can borrow typically ranges between 25% to 50% of your vehicle’s current market value, depending on factors like the car’s condition, age, and lender’s policies.
Before getting a title loan, be aware of the significant risks involved, such as high fees, steep interest rates, and potential vehicle repossession if you default on payments.
It’s crucial to understand the application process and required documentation to protect yourself and ensure a smooth borrowing experience, including providing proof of ownership, income, and undergoing a vehicle inspection if required.

Understanding Title Loans on Financed Cars

A car title loan is a short-term, secured loan that uses your vehicle as collateral. This loan typically requires repayment within 30 days, though some lenders offer longer terms. The primary allure of a title loan is its speed and ease of access, making it a viable option for those in urgent need of funds. In many cases, you may receive the funds on the same business day².

But what if you still owe money on your car? Can you get a title loan on a financed car? The answer is a resounding yes.

When you get a title loan on a financed car, the process is a bit more complex. Essentially, the title loan company becomes a lienholder on your vehicle, meaning they have a legal right to your car’s title until the loan is repaid. This doesn’t mean you lose access to your vehicle; you can continue to drive it as usual while making payments on both your existing car loan and the car title loan.

Title loan companies specialize in lending money secured by your vehicle’s title, providing quick access to cash even if your car is financed. However, it’s crucial to understand that failing to repay the title loan could result in the lender seizing your vehicle⁴.

Not all title loan companies accept financed cars as collateral. Policies vary among lenders, so financing through a dealership or bank can increase your chances of obtaining an auto title loan.

Eligibility Criteria for Title Loans with Financed Vehicles

Securing a title loan on a financed vehicle is feasible, but certain criteria must be met. The primary factors that influence your eligibility include the vehicle’s current equity, your ability to repay the loan, and your credit history¹.

Knowing these criteria can help you prepare a strong application and improve your chances of approval.

Vehicle Equity and Value

The cornerstone of your eligibility for a title loan on a financed car is the vehicle’s equity. Equity is essentially the difference between the car’s market value and the amount you still owe on it. Positive equity means your car’s title is worth more than what you owe, making you eligible for a loan. For instance, if your car’s market value is $10,000 and you owe $4,000, you have $6,000 in equity.

Lenders will also consider the car’s make, model, year, condition, and mileage when determining its value. Using online valuation tools or consulting a dealership can help you ascertain your vehicle’s market value. The more valuable your car, the higher the potential loan amount.

How to Calculate the Amount of Equity in Your Vehicle

Determining your vehicle’s equity is a crucial step in qualifying for a title loan on a financed car. To calculate equity, subtract the remaining balance on your existing auto loan from your car’s current market value. For example, if your vehicle is worth $12,000 and you still owe $7,000, your equity is $5,000.

Keep in mind that lenders assess equity to ensure there is enough value in your vehicle to secure the loan. If your outstanding loan exceeds the car’s market value, you have negative equity, which typically disqualifies you from obtaining a title loan.

You can estimate your car’s market value by using online appraisal tools, checking dealership offers, or consulting vehicle valuation guides. Regularly updating this estimate is important as factors like age, condition, mileage, and market demand can affect your vehicle’s worth over time.

To simplify this process, you can use our convenient title loan calculator to quickly estimate your potential loan amount based on current market values and your outstanding loan balance.

Income and Repayment Ability

Another key aspect of eligibility is showing your ability to repay the loan. Lenders require proof of stable income, which could include recent pay stubs, tax returns, or bank statements. This is to ensure that you can manage the monthly payments without undue financial strain¹.

Assess your current financial obligations before committing to a title loan. If your income is significantly higher than your outstanding car loan and your existing loan, it can positively influence your eligibility. Title lenders need assurance that you have a stable income source to meet the repayment terms.

Credit History Considerations

While credit history is a factor in the approval process, it is not as critical as the vehicle’s value and your ability to repay the loan. Most title loan lenders do not prioritize credit scores, focusing instead on the car’s worth and your repayment capacity¹.

Car title loans remain accessible even to those with bad credit, including options like auto title loans and car title loans.

The Application Process for Title Loans on Financed Cars

Applying for a title loan on a financed car can be done in person, online, or over the phone². The process typically starts with a loan inquiry where you provide basic information about your vehicle, your financial situation, and any existing auto loan.

Depending on the lender, you may need to undergo a vehicle inspection, which can be done in person or by submitting photos. Once the inspection is complete and the documents are verified, you can receive the funds, often within the same business day².

Finding the Right Title Loan Company

Choosing a reliable title loan company is crucial for a safe borrowing experience. Start by researching different lenders online and reading customer reviews on platforms like Trustpilot or the Better Business Bureau.

A reputable title lender ensures fair terms and a more positive loan experience through responsible lending practices.

Required Documentation for Title Loan Applications

To apply for a title loan, you’ll need to gather several key documents:

Original vehicle title (must show you as the sole owner)
Government-issued ID (matching the name on the title)
Proof of residency (e.g., utility bill)
Current vehicle registration
Evidence of vehicle insurance
References (names, phone numbers, and addresses of at least two contacts)
Proof of income (e.g., recent pay stubs)

How Much Can You Borrow with a Title Loan on a Financed Car?

The amount you can borrow with a title loan on a financed car largely depends on your vehicle’s equity. Lenders typically offer loans ranging from 25% to 50% of the car’s current market value, which can affect the title loan amount. For example, if your car is worth $10,000, you might be able to borrow between $2,500 and $5,000¹.

Factors such as the vehicle’s age, condition, and depreciation also play a role in determining the loan amount. If your car’s value has significantly depreciated, the lender may offer a lower loan amount.

If you owe more on your car than it is worth, you do not have equity, and borrowing might not be possible⁴.

Benefits of Title Loans

Title loans offer several advantages that make them an appealing option for borrowers in need of quick cash, especially those with financed cars:

Fast Access to Cash: Title loans provide quick funding, often within the same business day, which can be crucial during financial emergencies.
Easy Qualification: Unlike traditional loans, title loans primarily consider the vehicle’s equity and your ability to repay, making them accessible even with poor credit history.
Use Your Vehicle While Borrowing: Even though the lender holds the vehicle’s title as collateral, you retain full use of your car during the loan term.
Flexible Use of Funds: The money borrowed through a title loan can be used for any purpose, such as paying bills, covering unexpected expenses, or consolidating debt.
No Lengthy Approval Process: The application and approval process for title loans is typically straightforward and faster than bank loans, with minimal paperwork.
Potential to Build Credit: Some lenders report payment history to credit bureaus, which can help improve your credit score if payments are made on time.

These benefits make title loans a viable option for borrowers seeking quick financial help while using their financed vehicle as collateral.

Risks and Considerations Before Taking Out a Title Loan

Car title loans can provide quick financial relief but come with significant risks. The primary risk is vehicle repossession if you default. Additionally, high fees and interest rates can make repayment challenging⁴.

Potential Repossession Risks: Defaulting can result in the lender repossessing your vehicle. Make timely payments and communicate with your lender if you face financial difficulties⁴.
Comparing Interest Rates and Fees: Compare rates and fees from different lenders to find the best deal. Choose lenders with positive reviews to ensure competitive rates and fair terms¹.

Paying Off Your Title Loan

Repaying your title loan on time is crucial to avoid extra charges and the risk of losing your vehicle. Once the loan is fully paid off, the lender will remove the lien on your car’s title, restoring full ownership to you. Timely payments help maintain financial stability and prevent the severe consequence of vehicle repossession⁴.

Summary

In conclusion, obtaining a title loan on a financed car is a viable option for those in need of quick cash but comes with its own set of risks and requirements. By understanding the eligibility criteria, application process, and potential risks, you can make an informed decision. Remember, timely repayment is key to maintaining control of your vehicle and financial health⁴.

If you’re considering this option, fill out our request form to see how much you can get with no obligations. This step can provide you with clarity on your borrowing potential and help you plan your next financial move effectively².

Frequently Asked Questions

How Do I Get Title Loans for Cars Not Paid Off Yet?

You can get a title loan on a car that isn’t fully paid off if you have positive equity. Lenders usually require you to sign an authorization form to access info about your existing loan and may pay it off as part of the process.

You’ll need to provide documents like your vehicle title, proof of income, and ID. Some lenders also require a vehicle inspection. Policies vary, so choose a reputable lender and understand the risks, including possible repossession if you don’t repay.

Can I Take a Loan Out On a Financed Car?

Absolutely, you can secure a car title loan on a financed car, but you’ll need to meet certain requirements and provide the right documents. You must have equity in your vehicle to qualify¹.

What is The Most You Can Get From a Title Loan?

The maximum amount you can get from a title loan varies by lender and your vehicle’s equity. You can usually borrow 25% to 50% of your financed car’s current market value¹. Some lenders offer car title loans up to $50,000.

How Can I Get Out of My Financed Car?

If you’re looking to get out of your financed car, consider these options:

Sell the Car: Sell your car and use the proceeds to pay off the loan. Cover any shortfall if the sale price is less than what you owe.
Trade-In: Trade in your car at a dealership. The dealer pays off your loan, and you can roll the balance into a new loan.
Refinance: Refinance your auto loan to lower monthly payments or interest rates, easing financial strain¹.
Voluntary Repossession: Return the car to the lender if you can’t keep up with payments. This will hurt your credit score, and you may still owe money.
Loan Assumption: Some lenders may allow someone else to take over your loan.

Do You Need a Vehicle Inspection to Get Title Loans for Cars Not Paid Off?

Yes, in most cases lenders will ask for a vehicle inspection when you apply for a car title loan. The inspection helps confirm your car’s value and current condition so the lender can determine how much you may qualify for.

At 5 Star Car Title Loans, we make the process simple. Instead of bringing your car in for an in-person check, you can often complete the inspection online. Just upload a few clear photos of your financed vehicle and skip the hassle of a physical visit.

You’ll typically need to provide photos of:

The front, rear, and both sides of the car
The odometer showing mileage
The Vehicle Identification Number (VIN)

This quick step allows us to review your vehicle and move your application forward without delays.

Where Can I Apply for a Title Loan on a Financed Car Near Me?

Applying for a title loan on a financed car with us is simple and fast. Just follow these three steps:

Submit Your Loan Request or Call Us: Start by filling out our online loan request form or call us directly at (888) 309-0994 to speak with a loan specialist.
Provide Vehicle and Financial Information: Share details about your financed car, your financial situation, and any existing loans to help us evaluate your eligibility.
Receive Your Cash: After approval, get your funds quickly and use the cash to meet your immediate financial needs.

Let us help you get the financial help you need with a hassle-free title loan process.