Can I Get a Title Loan if My Car’s Not Paid Off?

A car title loan is a short-term loan that uses your vehicle’s title as collateral. If you don’t repay the loan in the agreed-upon period, your vehicle may be at risk of repossession. However, that process could become more complicated if you are financing your vehicle and still owe money on it. So, can you get a title loan if a car’s not paid off? Read on to find out.

What It Means to Use a Financed Car for a Title Loan

Using a financed vehicle for a title loan means that you are using the positive equity in your vehicle as collateral to secure a new, more favorable loan. A car title can only have one lienholder at a time, so the process will involve your new lender approving you for a loan, then using those funds to buy out or refinance your existing loan. That lender will then be paid in full and will release their lien on your vehicle. However, you will then have to sign your title over to your new lender, who will place their own lien on it. You can still drive your vehicle, and you may even get cash back if there is money left over after your loan is paid in full. Once you meet the terms of your repayment, your lien will be released.

How To Use Car Equity for a Title Loan

The process of getting a title loan on a financed vehicle may be lengthier or more complicated. The way title loans work for financed vehicles is:

• Determining Eligibility – Your lender will determine your eligibility by valuing your vehicle, reviewing your existing financing agreement, and subtracting what you still owe from your vehicle’s current market value
• New Loan or Title Refinancing – The lender may decide to issue you a new loan, which will be used to pay off your original auto lender. If there are funds remaining after this is done, they will be issued to you. This process is called a title loan buyout or title refinancing.
• Establishing a New Lien – When your old loan is settled, your new lender will be the lienholder on your vehicle. You will need to sign your title over to them, and they may be able to repossess your vehicle if you do not stay current on your payments.

Things to Consider Before Applying

This process can be risky if you aren’t sure that you can pay off a new loan. Before applying for a title loan on a car that isn’t fully paid off, you should consider:

• The interest rate of your existing loan vs your new one.
• Your current financial situation and budget, and how that might change in the future.
• Your ability to comfortably commit to a one-year plan for repaying a new loan.
• Your current employment and housing situation.
• The risk of default and the possibility of losing your vehicle, as well as your investment in the loan repayment.
• Potential for new fees or costs associated with the new loan.

Finding Lenders Allowing Title Loans on Financed Cars

Before seeking out an emergency car title loan, you should do some research. This can protect you from making a bad financial decision or potentially losing your vehicle altogether. Here are some tips for finding quality lenders allowing title loans on financed cars:

• Ask friends, family, and colleagues for recommendations.
• Look for local companies with a long, verified history in the area.
• Confirm that the company is legally authorized to offer services in your state.
• Verify that they have physical locations in the area that you can visit or call with questions.
• Determine if they are transparent about interest rates, fees, finance charges, and repayment terms.
• Choose a lender that offers fully amortized loans, if possible, and avoid interest-only loan traps.
• Carefully review the repayment policies, specifically related to default and repossession.
• Read customer reviews and testimonials to make sure the company has a good reputation in your community.

Call VIP Title Loans to Learn More About Title Loan Buyouts

VIP Title Loans operates six auto title offices in the DFW Metroplex area. We buy title loans from competitors, allowing you to secure lower interest rates and better repayment terms, even if your vehicle is financed. These auto equity loans can help you meet unexpected financial needs or get fast cash for emergencies while also improving your loan terms. Apply online or visit one of our auto title loan locations to get more information or start the process.

Answers to FAQs About Title Loans for Financed Cars

Why should I get a title loan on a financed car?

There are several reasons for this. You might want to use car equity for a title loan if you:

• Need access to cash for an emergency situation like overdue utility bills, hospital or medical bills, overdue rent, or other unexpected debts
• Want to escape a bad loan that has a high interest rate, inflexible terms, or a short repayment structure, so that you can avoid bad credit
• Need to lower your monthly payments because your financial situation has changed, or you need to free up money in your budget
• Are in danger of repossession because you can’t meet the terms of your original financing agreement

Am I eligible for a title loan if my car’s not paid off?

Title loan eligibility for financed cars depends on the requirements of each individual lender. Most companies consider your vehicle’s equity, the existing financing agreement, and the original lender’s buyout policies. They will also take into account your income and ability to repay the new loan.

What are the risks of using a financed car for a title loan?

You face the same risks you do if you finance a vehicle. If you do not make your payments on time, you may be subject to additional fees or penalties. Repaying the loan could affect your monthly budget and make it harder to afford other things. You may face credit issues if you default on or don’t comply with the terms of the repayment agreement. Your vehicle could be repossessed if you default, even if you were close to paying off the loan.

Do I have to give up my car after a title loan buyout or refinance?

No, you can keep your vehicle and continue driving it as long as you stay current on your loan payments.