Since the early 1990s, title loans increasingly gained
popularity and offered a whole new option to get quick cash
for people with poor credit. Although not all lenders or
states provide title loans, there are states where you can
find lenders offering title loans, title loans on a financed
car, and even second lien title loans.
Lenders place a
lien on the car title
in exchange for a loan amount when you
get a title loan. Whereas, if you have a financed car or
car title loan, there’s already a lien placed on your vehicle. Luckily,
you can get a title loan with a lien on your car or a second
lien title loan. Let's get to know more about it in this
article.
A Title Loan With a Lien and Second Lien Title Loan
First, it’s essential to understand that not all title loans
with a lien on the title are second-lien title loans. When
you have a lien on your car title, it indicates that you
don’t have the physical copy of your vehicle’s title. At
CASH 1, you can apply for a
title equity loan online, over the phone, or at one of our convenient store
locations in Arizona. This is the option for those still
making payments on their car and have accumulated positive
equity in that car.
If you are not happy with your current title loan lender,
you have an option to
refinance your title loan
with us. By doing this, you can save money on your new loan
to meet or beat the
interest rate
of the old title loan. To get a title loan with a lien from
us, you will have to talk to our customer service
representative to understand the terms of your existing loan
and find a way for you to get the funds you need.
Regarding second lien title loans, these are difficult
because you already have a title loan with a remaining
balance. There is already the first lienholder, and most
often, you need to get permission from the first title loan
lender to place a second lien. Yes, it can be as
overwhelming as it sounds, and this is why we are here. If
you want to know more and be familiar with second lien title
loans, you can continue to read further.
What are Second Lien Title Loans?
Before learning about second lien title loans, it’s
essential to know what exactly the phrase ‘second lien’
means. A second lien is a loan secured using a property
already used as collateral and has a first lien existing in
the place. While the rights of both first and second lien
holders are pretty much the same, the second lienholder will
only be repaid after the first lienholder in case of default
by the borrower.
Thus, a second lien title loan means getting a title loan
when your car title is not lien-free. Unfortunately, the
complexity of having two lienholders on the same car title
makes second lien title loans the rarest loan option.
Generally, title loans with a lien already on your car are
used invariably as second lien title loans.
How Do Second Lien Title Loans Work?
The procedure of getting a second lien title loan is very
similar to that of getting a title loan for the first time.
Now that you know you may still be able to get a title loan
with a pre-existing lien on your car, you would probably
want to see how the funds are granted and the basis for
deciding whether or not those funds will be given to you.
Although each title loan company that provides a second
title loan may have their procedure to approve the funds, a
majority of them consider how much they will have to pay to
get rid of your existing lien on your vehicle. Next, they
will look at how much you want to borrow in addition to that
amount. If you can meet the criteria they set to
receive a loan
of that amount, you will get money equal to the amount in
excess after paying off your previous lien to use at your
discretion.
How Can I Use a Lien on a Car Title Loan to Get the Cash I
Need?
Some lenders offer a title loan with a lien and help you
borrow the money you need and pay off your existing title
loan. However, we suggest you carefully go through the loan
documents before signing. This is to check whether you will
be actually receiving the amount you need after the previous
title loan is paid off or not. Some lenders also charge fees
for early payments on your loan, unlike
CASH 1. This could eat away a part of the money that you were
expecting to receive.
Here Is An Example Of How You Can Get Title Loans With A
Lien:
Let's consider you have $2,000 outstanding on your title
loan or car loan and have been approved for another title
loan with bad credit for $5,000 with a lien already placed
on your vehicle. The lender of title loan with a lien will
first use $2,000 out of the approved amount to pay off the
lien and become the temporary lienholder on your vehicle’s
title. You now owe $5,000 against your vehicle title and get
$3,000 to use for whatever you need.
What Do I need to qualify for a title loan with a lien?
The
requirements of a title loan
with a lien or second lien title loans may vary from state
to state and lender to lender. In most cases, you might need
the permission of your first lienholder to be able to add a
second lienholder to your car’s title.
Assuming that the first lienholder has granted permission,
you will have to provide proof of the original lien when
applying for a second lien title loan. A valid ID to prove
you are 18 years or above is also required. Apart from this,
your second lien title loan lender may ask you to provide
your basic contact information data like name, address,
phone number, and email address.
Just like every title loan requirement, you will have to
bring your vehicle for a thorough inspection before you get
the loan approval. It is not a lengthy procedure but plays a
vital role in deciding whether you qualify for a title loan
or not.