How to Secure Second Lien Title Loans

When financial emergencies strike, second lien title loans can offer a valuable lifeline. These title loans allow borrowers to leverage their vehicle’s equity, even if they have an existing car title loan.

By using your car’s title as a collateral, 2nd lien title loans offer a straightforward solution for accessing same-day funds. These funds may range from $2,600 to $50,000¹.

Key Takeaway

• Second lien titles enable borrowing more against your car, despite an existing loan
• These loans don’t require a clear car title, meaning you can apply despite existing liens
• Getting a second lien requires the first lienholder’s permission for an added lien
• First lienholders have priority over second lienholders in case of repayment default
• Consider the high interest and repossession risk before choosing a second lien loan
• Online application for a second lien title loan is usually quick and straightforward
• Borrowers can receive loan amounts of up to 50% of their car’s value

What is a Second Lien Title Loan?

A Second Lien Title Loan involves using your vehicle’s title as collateral to secure additional funds, often while having an existing loan on the same vehicle.

However, obtaining a second lien title loan can be challenging. This is because the current auto lender holds a lien over the car, which is a legal right to take possession of the vehicle until debts are cleared.

As the first lienholder, they must grant permission for a second lien to be placed on the car title. If they decline, approval for a second lien title loan is not possible. Consequently, many title lenders require borrowers to repay their current title loan with the first lender before granting new loans.

However, it is worth noting that these second title loan lenders might charge a higher interest rate due to the high risk involved. So, if you want to get a new car title loan with the same car, you can improve your chances by reaching out to us².

How Does a Second Lien Title Loan Work?

There are two major ways your 2nd lien title loan provider can relate with the current lien holder when considering whether to approve your loan or not:

1. Gaining Control of the Lien

Here, the second title lender will gain control of the original lien. They become the first lienholder by settling your current title loan lender.

For instance, if your existing car lien has $1,000 left on it and the new lender approves you for a $4,000 title loan. The new lender would pay $1,000 to the existing lien holder to gain full control. The lender then gives you the remaining $3,000.

2. Loan Responsibility

Here, your new title lender will be responsible for your current loan. They promise to settle your existing lender if you default on the repayment terms. The new lender subtracts the amount you owe the lien holder from the loan.

Generally, after finding a lender willing to offer this second lien title loan online, some may ask you to bring your car to a designated storefront location for inspection. This is because the lenders need assurance that your car’s current market value can cover your loan.

Hence, they need to determine if your car is in tip-top condition and has relevant market value.

Requirements for a Second Lien Title Loan

For a second lien title loan, the requirements are similar to the first title loan. However, you also need approval from the first lienholder for the additional lien.

The Requirements Are As Follows:

• A state-issued ID
• Proof of income
• Proof of residency
• Proof of address
• Photos of the qualifying car
• Proof of vehicle insurance

How to Get a Second Lien Title Loan

Applying for a second title loan on the same car is similar to what you experienced while getting your current title loan.

The 4 Simple Steps Involved:

1. Fill Out an Application:

Most lenders will request information like your name, address, etc, to confirm your eligibility.

2. Provide Required Documents:

Submit the relevant documents mentioned earlier to provide proof that you can repay the loan.

3. Await Approval for a Loan Agreement:

Approval may be delayed due to the need for second lienholder permission.

4. Get your Loan:

You’ll receive an offer with details like loan amount and loan terms. If satisfied, sign the contract. 

Benefits of a Second Lien Title Loans

• Access to quick cash especially in case of an emergency
• Loan term of about 36 months with flexible payment terms for some lenders
• Accepts good credit, bad credit, and no credit in many cases
• No hidden fees or prepayment penalties
• Borrowers can continue to use their cars while repaying the loan

5 Things to Consider Before Applying for a Second Lien Title Loan

Second title loans are designed to serve as short-term solutions for unforeseen financial emergencies⁴. However, you need to be sure it is the best solution for you. 

Therefore, before opting for second title loans online, consider these few things:

• Impact on Your Debt Profile: 

Consider how the loan will affect your overall financial situation and debt burden especially if you have other high-interest debts.

• Understand the Total Cost Implication of the Loan: 

Beyond the principal amount, be aware of the interest rate and other additional charges. So, calculate the total cost involved instead of diving in headfirst.

• Risk of Repossession: 

Consider the possibility of losing your car in case of repossession and whether you can manage without it.

• Alternative Loan Sources: 

Consider seeking alternative loans with lower costs, such as borrowing from friends or family members.

• Read the Fine Print: 

Ensure you understand all the terms and conditions of the loan agreement including the interest rate, repayment schedule, and consequences of defaulting.

How to Repay a 2nd Lien Title Loan

• Get a Title Loan Quote: Reach out to your lender and request for a payoff quote. This informs you about the total amount you need to repay your loan in full.
• Repay your Loan: Depending on your loan servicer, you can repay your loan in person to a specific money transfer location, over the phone, or online.

After repaying the total amount, including the interest, and other related fees, the lien will be removed from the title.

Your title will then be sent back to you by your state’s Department of Motor Vehicles via mail. This might take 15 business days or more based on your state.

What Happens if You Don’t Repay Second Lien Title Loans

Lenders give borrowers a few months to pay up based on the agreement. However, these are the potential consequences if you default:

• Credit score damage
• Endless debt cycle
• Loss of car

Lender Tip: 

If you’re unable to repay your loan, speak to your lender before missing any payments. They might be able to extend your repayment period or adjust your repayment plan to help you avoid defaulting and losing your car. 

Remember, both you and the lender aim to avoid loan default and ensure timely repayment⁴.

Other Alternatives to Second Lien Title Loans

If you are looking for an alternative to a second title loan, you can consider these options:

• Borrow from family and friends
• Personal loans
• Payday loans
• Title loan refinancing
• Title loan on financed cars

FAQs

What is the Difference Between a First Lien and Second Lien?

The first lien has the first claim and higher priority on a borrower’s collateral for car title loans, while the second lien has the claim and lesser priority.

Put simply, if a borrower defaults in repayment and the collateral is sold, the original lienholder is paid first, while the second lienholder is paid thereafter.

Where Can I Find a Second Lien Title Loan?

To begin, you can start by filling out our free uncomplicated online request form. This will help determine if you qualify for a second lien title loan².

Once you qualify, get a free estimate and compare offers from multiple licensed lenders to choose the one that best suits your specific needs and interests.

Furthermore, you need to reside in a state where multiple vehicle liens are a thing.

How Do Second Lienholders Determine Your Loan Amount?

Second lienholders evaluate your vehicle’s current value, source of income, other financial commitments, your chances of repaying the loan, and the outstanding loan amount on your first lien.

How Much Cash is the Highest Loan Amount I Can Receive with a Second Lien Title Loan?

You can get a title loan as high as $50,000 or 50% of your car value. Be aware that not having a lien-free title will likely reduce the amount of loan that might be approved.

When Will You Be Credited?

If your loan request is approved, you can access your money through direct deposit or MoneyGram locations as fast as on the same business day or the next business day².

Can I Have Two Title Loans on the Same Car?

Yes, you can have two title loans on the same car but it can be a challenging process because of the lien holder and high risk involvement.

Final Words

Securing a 2nd lien title loan requires careful consideration of your financial situation and the risks involved.

By using your vehicle’s title as collateral for additional funds, you can access the financial assistance you need. However, it’s crucial to weigh the terms and conditions, including potentially higher interest rates, before proceeding⁴.

Feel free to contact us right away to start your application process, regardless of your credit status or existing liens. We also offer a free estimate for second lien title loans.