Auto equity loans, also known as car title loans, can be a quick way of generating money when you’re in a pinch. This is a short-term loan that enables you to stake your car as collateral, borrowing money against the equity in your vehicle.
If you need to borrow funds fast but haven’t got a great credit rating, an auto equity loan could be your quick fix. But this ‘quick fix’ can soon become a financial minefield when you don’t have a clear title. The last thing you want is to make your financial position worse – so how can you get an auto equity loan safely?
Luckily, you’re in the right place. Whether you’ve lost your title or have another credit loan outstanding on your car, it can be tricky to get auto equity loans without a clear title. But with this handy guide, you’ll have a better idea of how to get a title loan without a title.
What is an Auto Equity Loan?
An auto equity loan (or car title loan) is a type of personal loan, usually the last resort for people with a bad credit score. Having poor credit is often a barrier to borrowing money from a bank or lender, as lenders may question your ability to repay the sum. However, with auto title loans, your credit score won’t be considered – all you need to qualify is a functional car.
By taking out an auto equity loan, you can borrow money against the amount of equity in your vehicle. This means that you can stake your vehicle as collateral. If you cannot repay the loan within the agreed period, your lender could take your vehicle as an alternative form of payment.
The loan amount you qualify for will depend on various factors, including:
- Home State
- Value of your vehicle
The value is usually determined by the:
- Overall condition
Let’s say that you urgently need to borrow $5,000 to satisfy a debt. Your vehicle has a value of $8,000, which means you have $3,000 in equity (the total value of your car minus the amount of money you owe). Depending on your lender, you could qualify for a loan of up to $3,000 by borrowing against the equity in your vehicle.
Can You Get Car Title Loans Without a Clear Title?
If you’re wondering, ‘can I use my car title as collateral for a loan,’ the answer is yes. Unfortunately, things can become much more confusing if you’re looking for an auto equity loan without a clear title. But that doesn’t mean it’s impossible.
Having a clear title means you are the sole owner of your car, SUV, motorcycle, or truck. There are two main reasons why you might not have a clear title:
- You may have lost the paperwork that proves you have a title
- You may already have a loan outstanding on your vehicle.
If you haven’t got a clear title because you still need to repay an existing loan, this means your title has a lien. This type of security interest is used to guarantee the repayment of a debt.
People who don’t have a lien-free title aren’t legally recognized as the sole owner of their vehicles. This is because the lienholder – which might be a bank, lender, or car dealership – technically owns the equity that hasn’t been paid yet.
Many lender services will require you to show proof of a lien-free title to qualify for an auto equity loan. But as long as there’s enough equity in your vehicle, there are ways to make sure you can obtain the personal loan you need.
How to Get a Title Loan if You’ve Lost Your Title
If you need an auto equity loan but have lost your title, the process will be a little easier than if you aren’t the sole owner of your vehicle. We all know to keep important paperwork somewhere safe, but sometimes this is easier said than done. If you can’t find your title certificate when you need it urgently, your first step should be to contact the Department of Motor Vehicles (DMV).
To do this, you can either visit the DMV website online or call your local DMV office, where you can request to replace your car title. The exact documents you’ll need may vary depending on your state, as will the processing fees and times. The average cost of replacing your title is around $50.
You will need to provide personal details to gain approval for a new title on your application form. This information could include:
- Your full name and government-issued ID
- Proof of address and zip code
- Your vehicle registration papers
- Proof that your vehicle is insured
- A signed statement that your title is lost
Once you’ve submitted your paperwork, you’ll need to wait for your application to be approved. Although it’s relatively easy to replace a title, the downside is that it can take weeks for your title to be renewed. If you need to get cash quickly, you may not want to wait that long.
How to Get a Title Loan While Making Vehicle Payments
If you want to get a car title loan but are still making payments on your car, you have several options. The right one for you will depend on factors such as the amount of money you wish to borrow and the amount of equity in your vehicle.
It can also depend on the state you live in – the laws surrounding auto equity loans vary around the country. It’s impossible to get auto title loans in five states: Hawaii, Montana, Nebraska, New York, and West Virginia.
These options include:
- Refinancing your auto title loan (this essentially involves adding your existing loan to your new auto title loan)
- Taking out second-lean title loans
Refinancing Your Loan
Refinancing your loan involves taking out a new loan to pay off an existing one. This can be a risky financial strategy as you’re essentially piling debt onto more debt. However, there are circumstances in which it’s a smart move. An example is if your original loan has a high annual percentage rate (APR).
There are two types of loans you may choose to refinance:
- An existing title loan
- Your regular car payments
Refinancing a title loan can potentially be a good idea if you’re struggling with high-interest rates, as we mentioned above. Refinancing your outstanding car payments is a way of accessing the equity in your vehicle before you’re the sole owner.
In this case, you must choose a lender willing to cover your outstanding loan cost. This means they will become a lienholder of your vehicle, and you will owe them two combined loan amounts. Lenders will usually only do this if you’ve almost paid off the total cost of your vehicle already.
As an example, let’s imagine you have a $3,000 payment outstanding on your vehicle, and you need a loan of $2,500. Your lender services could choose to pay off the $3,000 on your behalf, as well as lend you the $2,500 you need. Now, instead of owing $2,500 to your lender and $3,000 to your original lienholder, you owe $5,500 to your lender. When your repayment period is up, you’ll need to return the total sum or risk losing your car.
If you decide that refinancing your loan is a good idea, double-check whether this is allowed in your state. Although 45 states enable people to take out auto title loans, not all allow this type of refinancing.
Taking Out a Second Title Loan
To get a car title loan without a clear title, another option is to take out a second title loan. This involves adding a second lienholder to your title – but while it might sound simple, it can be a confusing process.
Strictly speaking, your existing lienholder will need to permit you to add a second lender to your title. Unsurprisingly, most major financial services won’t give their approval to this idea.
Some lenders will simply choose to refinance your loan and add any outstanding payments to your total, or they will allow you to take out a second loan off the record. As you’d imagine, this isn’t necessarily a sensible way to obtain funds, so make sure you genuinely qualify for a second loan before approaching lenders
How to Qualify for Car Title Loans Without a Clear Title
To qualify for an auto equity loan without a clear title, you’ll need approval from your chosen lender services. This involves passing the loan application process, which will vary depending on the company you decide to approach. As a general rule, you should expect to provide the following information:
- Proof of address and zip code
- Proof of income
- ID proof (e.g., government-issued ID)
- Details of your car insurance
- Your vehicle registration number
- Recent photos of your vehicle
If you’re applying online instead of using the services of a local lender, these photos will prove that your vehicle is in good condition. Most local lenders would ask to see your car in person before allowing you to obtain a loan. This is to verify that you’ve described the vehicle accurately on your application.
Do You Need a Credit Card or Bank Account to Gain Approval for a Loan?
You don’t need to have a credit card or bank account to gain approval for a loan. Although it’s much easier to get cash via a bank account transfer, you can choose to receive your credit loan via check if you prefer.
How Much Money Can You Borrow for a Car Title Loan?
The amount of cash you can borrow will depend on the amount of equity in your car, as well as personal details such as your proof of income. The minimum loan amount could be around $100, while the maximum loan amount would be your total equity minus the cash you need to borrow.
Cash loan amounts vary by state, too. When searching for credit companies that offer auto title loans, check that they’re available in your area. It’s also important to check their APR rates. It may seem as though they offer generous credit, but you won’t be doing your income any favors if you’ll be racking up extra debt alongside your loans.
Are Car Title Loans Worth It?
Vehicle title loans are often the last resort for people with a bad credit score, they can be much more expensive than other types of loans. Depending on factors such as the equity in your vehicle, your personal loan could come with very high-interest rates. Only you can decide whether the financial benefit will outweigh the risk.
If you think that a car title loan is a sensible decision for you, make sure to choose your credit lender carefully. Look out for lenders that offer auto loans without sky-high interest rates – and always remember that you’re jeopardizing your vehicle by taking out this type of loan. Just because the process won’t affect your credit rating doesn’t mean it’s consequence-free!
As you can see, taking out a title loan without a clear title is a risky business. But for thousands of Americans all over the country, it’s the best way to boost their income without affecting their credit score.
If you’re struggling with your financial situation and need to obtain cash quickly, know that you can put your car title up as collateral. But you must pick a credit loan provider that is regulated, reliable, and has your financial interests at heart.
Hopefully, this guide has shown you how to get a title loan without a clear title. Contacting a Max Cash representative is the best option if you’re ready to obtain a loan. They can help you find a trustworthy credit company online.
Call Max Cash toll-free today if you have more questions about the process or are ready to get a loan without a clear title.