Second Lien Title Loans: When You Can Get One and What to Do Instead

A second lien title loan lets you borrow money using a car that already has a loan on it, such as an auto loan or another title loan.

The first loan stays open, and a second lender adds its own lien to your car’s title.

That means you pay two loans at the same time, so your monthly payments go up. Your risk of falling behind goes up too, and in case of default, you could lose your car.

Second lien title loans are rare because they carry more risk for both lenders and borrowers. If you stop paying, the first lender gets paid first, which leaves the second lender with less protection. Some states also do not allow a title loan on a car that already has a lien.

Important: In some cases, we may be able to offer a second lien title loan. More commonly, we offer a new title loan that pays off your existing auto loan or title loan. You get the money left over and have just one loan to repay.

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.

What Can You Get Instead of a Second Lien Title Loan?

We may be able to pay off your existing loan with a new title loan and give you the money left over in cash. This leaves you with just one loan and one monthly payment.

For example, if you owe $2,000 and qualify for a $5,000 title loan, we pay off the $2,000, and you get the other $3,000, minus any fees.

This works whether you’re still making car payments or have a title loan with another lender. To qualify, your car must be worth more than you owe on it, and you must show enough income to repay the new loan.⁵

With us, you may qualify for up to $25,000, depending on your car, your income and your state’s law.⁶

Why Is a True Second Lien Title Loan So Rare?

In Virginia, Texas, Florida and Tennessee, the law does not allow a title loan on a title that already has a lien. In those states, your current lien has to be paid off as part of the new loan.

In other states, a second lien is still rare, for three reasons:

• The first lender holds the title: it keeps the title on paper or electronically, so a second lender usually cannot add its lien. Without a lien, nothing backs the second loan if you default, which makes the loan too risky to offer.
• The first lender rarely allows it: banks, credit unions and title loan companies almost never share their place on the title.
• The first lender is paid first: after a repossession sale, little or nothing is usually left for a second lender. That means the second lender usually loses money if you default.

See title loan laws by state for the rules where we lend.

When Can You Get a Second Lien Title Loan From Us?

In some cases, we can offer a second lien title loan. It is rare, and we look at each request one by one.

To qualify, all of these need to be true:

• Your state allows it: state law has to permit a title loan on a car that already has a lien.
• Your first loan allows it: most auto loan contracts do not allow a second lien without the first lender’s written OK.
• Your car is worth enough: its value has to cover both loans.
• Your income covers both payments: you need enough income to repay both loans each month.

If one of these is missing, a payoff loan is usually the way to borrow more against your car.

Can You Get a Title Loan When Your Car Has a Lien?

Yes, in most cases. The steps depend on who holds your title.

Is Your Car Still Financed?

If a bank or credit union still holds your title, we may be able to pay off that car loan with a new title loan on a financed car and send you the money left over.

Do You Have a Title Loan with Another Company?

We may also be able to replace a title loan you have with another company. This is called a title loan buyout, and it works in four steps:

1. You give us that company’s name and your account number, and we request an official payoff quote from them.
2. Once you are approved and sign, we pay that company directly. You never handle that money.
3. It releases its lien, and we become the new lienholder.
4. The difference goes to you.

Do You Already Have a Title Loan with Us?

If you already have a title loan with us and need more money or, in some cases, a lower payment, we may be able to refinance it into one new loan. We can adjust the loan amount and payments to fit your needs.

If you borrow more, the new loan pays off your old balance, and you get the difference. This works only when your car is worth enough to support the bigger loan.

A lower payment usually means a longer loan, so you pay more interest in total. Read whether you should refinance your title loan.

“The most common thing I see stop these loans is a payoff that is higher than the car can support. Before you apply, ask your current lender for a 10-day payoff letter and have your account number ready.

If your car’s value has dropped or you have paid down little of the balance, the car may not support a bigger loan yet, and our team can tell you that before you sign anything.”

Bryan Solis
Head of Underwriting, 5 Star Car Title Loans™

How Much Can You Get When We Pay Off Your Loan?

Your new loan can be about 25% to 50% of your car’s value, depending on your income and your state’s law, up to $25,000.⁶

Example: your car is worth $12,000 and you owe $2,000. Here is how the money splits at both ends of the range:

Your own offer depends on your car’s value, your income and your state’s law.⁶ In Tennessee and Virginia, the law caps a title loan at $2,500.

Can You Get a Second Title Loan on the Same Car?

Usually not. Second lien title loans are rare, including with us, because the first lienholder has priority over the vehicle. We do not offer them in states where they are not allowed, such as Virginia, Texas, Florida and Tennessee.

If you own another car with a clear title, you may also qualify for a separate title loan on that vehicle.⁶ Learn more about how many title loans you can have.

One exception is Tennessee: state law allows the same lender, at the same location, to issue more than one title loan on the same vehicle, as long as the total amount does not exceed $2,500. Where the law allows it, we can do this too.

What Should You Know Before Borrowing More?

Before you borrow more, make sure you can make every payment on time. Compare your options carefully, and consider talking with a financial advisor or a nonprofit credit counselor.

Read whether a title loan is right for you.

What Does Borrowing More Cost?

A bigger balance means more interest, and a new loan restarts your loan term. Our APRs go up to 150%, and never above the cap your state’s law sets.⁷

The FTC warns that rolling over a title loan adds more interest and fees to what you owe.

In a 2016 CFPB study of single-payment auto title loans, more than four in five were renewed on the day they were due, and one in five borrowers had their car seized.

What Happens If You Cannot Pay?

If you stop paying, your loan goes into default. Because your car secures the loan, we can repossess and sell it under your state’s law.⁹

If the sale does not cover what you owe, you may still owe the rest where state law allows, and the balance can go to collections.

If you think you will miss a payment, call us first. We may be able to find a solution with you, such as refinancing your current loan with more flexible payments.

Our guide to title loan repossession explains your rights.

How Do You Apply When Your Car Has a Lien?

You apply the same way as for any title loan, with a few extra papers about the loan you already have.

1. Apply and pre-qualify online. Tell us about your car, your income and the loan you have now. We do not run a credit check when you apply and see if you pre-qualify.
2. Send your documents. Send your photo ID, proof of income,⁵ proof of insurance, proof of address and photos of your car. Because your car already has a lien, also send:
   1. A current statement from your lender: we may ask for one that shows your account number, your car’s VIN and that your payments are up to date.
   2. A 10-day payoff letter: it shows the exact amount needed to close your loan, plus the daily interest, so we know how much to send on payoff day.
   3. Your first lender’s written OK, for a second lien only: a signed letter or consent form that allows a second lien on your title.
   4. A title power of attorney form: we may ask you to sign one so we can handle the DMV paperwork with your old lender and record our lien.
   See our title loan requirements for the standard items.
3. We check your car. We look at your car’s condition and mileage, in person or by photos. Then we compare its value with your payoff amount to see if it covers your current loan plus the money you need.
4. Review and sign your offer. Once you decide to take the loan, we may run a soft credit check as part of the final approval. That does not affect your FICO score. Take your time to check the amount, APR and payment schedule, and call us with questions before you sign.
5. You get your money, and we pay your lender. When you are fully approved and sign before 2 PM local time on a business day, we send your money the same business day, otherwise the next business day.⁸ Paying off your old loan runs on its own, slower track: a bank transfer to your old lender usually takes 1 to 2 business days, and a mailed check 5 to 7 business days.

Applying and getting your loan estimate are free, with no obligation to take the loan.³

Frequently Asked Questions