If you own a car, title loans are an option to borrow money quickly. There are 23 states that allow these loans while they’re available in 4 others through legal loopholes.
But what if you still owe money on your vehicle? Can you get a title loan on a financed car? Let’s look at how it works.
How Do Car Title Loans Work?
A title loan lets you borrow money using your car as collateral. Lenders register a lien against the title of your car and if you don’t make your loan payments, they can repossess it.
Car title loans are different than car equity loans in a significant way — they’re based on the car’s value, not how much equity you have in it. With a title loan, you can borrow as much as the value of the car in many cases.
The amount you’re eligible to borrow depends on the lender’s rules. Some will lend you up to the full value while others will require you to pay off the existing financing with some of the loan funds, leaving you with the difference.
You can find more info here about how to figure out how much your car is worth.
Factors to Consider About Cash Loans on Car Titles
If you’re thinking about borrowing money through a title loan, there are several things to consider first.
Will You Get Enough Money From the Loan?
If you need a certain amount of money, will the value of your car cover it? And if you still owe money on your car, will you need to pay that off with some of the loan proceeds?
Can You Afford the Payments?
This is one of the most important factors with any type of loan, not only title loans. If you can’t afford the payments, you shouldn’t borrow the money. And keep in mind you might have to make payments on both the title loan and the car itself.
What Are the Terms of the Loan?
Is the interest rate reasonable? Is the term of the loan long enough to allow reasonable payments but not long enough that you’ll be paying it for years to come? Make sure you’re comfortable with the terms before signing the loan documents.
What to Look For When Choosing a Lender
When comparing title loan offers, there are several factors to look for, including:
- An easy, convenient application process
- Flexible payment options
- No hidden or unreasonable fees
- A fast decision on your approval
Take the time to review several lenders to find the best choice. Don’t let the stress of needing money quickly drive you to make a bad decision.
Can You Get a Title Loan on a Financed Car?
The answer to the question, “Can you get a title loan on a financed car?” is a resounding yes. Just make sure you do your due diligence when choosing a lender.
Choosing well will help you avoid any surprises that could jeopardize your vehicle.
Be sure to check out the Finance section of our blog for more helpful tips and tricks about personal finance topics.