Title Loan Refinance

Title loans can be a great way of getting emergency funding when your credit score prevents you from being approved for a traditional loan or if you don’t want to wait for the bank’s decision. While title loans take into consideration your ability to repay the loan, anything can happen, and you might find yourself in a situation where keeping up with the loan’s repayment is becoming too much.

If you feel like the amount you’re paying each month to repay your vehicle title loan is too high, and you would like to lower it even slightly, then you might be able to refinance it to get better repayment terms. But what is a car title loan refinance exactly, and how does it work? That’s what we’ll be talking about below. 

What Is Title Loan Refinance? 

Title loan refinancing is the process of trading out your old vehicle title loan for a new one with different terms. The way it works is that your new lender will pay off the remaining balance of your old one and give you a new loan based on the amount they paid so that you can start repaying it. 

The repayment conditions are typically better, but in unique cases, you might actually end up with terms that are less favorable than the ones you had before. Each situation is different, which is why it needs to be analyzed before making any decisions. 

You can either refinance the existing loan with the lender you’re already repaying or a completely different one – the choice is yours in this department. 

A Step-by-Step Guide to Refinance Title Loan

So, what does the title loan refinance process look like? It’s quite straightforward, so let’s go through the steps: 

Consider Your Situation 

In most cases, title loan refinancing will be a good decision. However, everyone’s case is different, which is why you need to sit down and take a look at your own situation to assess whether it might be something that will improve it or quite the opposite. 

Has the market value of your vehicle decreased? Have you damaged it somehow, for example, by being in a car accident? If yes, then you might want to reconsider refinancing your title loan, as due to the decreased value, you might not be able to borrow as much as you did when taking out the first title loan. 

Also, make sure to check your contract. Although it’s not that common, some lenders might actually include an early payoff penalty – depending on how high it is, it might be more favorable to stay with your old lender, so that’s one more thing you need to take into account with title loan refinancing. 

Research the Lenders 

When it comes to refinancing your title loan, you have two options as far as lenders go – you can stay with the one you’re currently repaying, or you can go for a completely different one. While the second option is more time-consuming, as it often requires extensive research, in the long run, it might turn out to be the more beneficial option. 

Many lenders offer a free first meeting where you’ll be able to discuss the available options specific to your situation, so scheduling a few of those with different lenders might be something to consider. 

Think about the terms each lender offered you, and analyze their pros and cons. Also, make sure to check the lenders’ online reviews, as in today’s world, there’s probably no better source of information about a company than what other people are saying about them online. 

If you don’t have the time to do it yourself, reach out to us – we’ve been in the industry for years and managed to gather a network of dependable and credible lenders. We’ll connect you with them so that you don’t have to do any heavy lifting yourself. 

Prepare the Documents 

Once you know more or less which lender you want to go with, it’s time to collect the necessary paperwork. Most lenders will have the same requirements for title loans and title loan refinance, although it’s best to check with the lender, as they might have a unique requirement in terms of documentation. Either way now is the time to start collecting it. 

What Is Needed to Sign a Title Loan Refinance Contract? 

To get a title loan refinance, you need to submit a number of documents to your potential new lender, including: 

  • Authorization to pay off the loan – In order to pay off your old loan, the new lender needs to have your authorization to do so. This document needs to be provided at the time of or before signing the new contract. 
  • Valid government-issued documentation – This could be a passport, an ID, or a driver’s license. 
  • Proof of residence – The lender might need some proof of residence, as there are states in which title loans can also be issued to its residents. Documents that can be used as proof of residence include utility bills, lease agreements, insurance policies, and more. 
  • Vehicle title in your name – Of course, the most important part of applying for any title loan, whether it’s to get a new one or refinance the old one, is to provide proof that the vehicle’s title is in your name and, therefore, can be used as collateral. 
  • Proof of income – To show that you’re able to repay the loan, you might have to provide proof of income, such as recent pay stubs or bank statements. 

Again, your potential lender might require some additional documentation aside from what we mentioned, so make sure to ask what exactly they need to process your application. 

Apply for Vehicle Title Loan Refinancing and Wait for the Decision 

Once you have picked your lender and prepared the necessary documents, it’s time for the next step – filling out the application. In most cases, the lender will have an online form ready for you to fill out. If they don’t, you might have to go the traditional route and visit their physical office to complete the application on the spot. 

When the application is done and the lender has received it, it’s time to wait for the final step – the approval. How long that would take depends on the lender. Some will have your decision in just a few minutes (especially if they mainly or solely operate online), while others might require a few days to process the application and verify the documents. 

Negative Decision – What Now? 

If, by chance, you receive a negative decision rather than a positive one, you should receive information about why the application was rejected. You have two main options here – look for a new lender with less strict eligibility criteria, or fix whatever it was that caused you to receive a negative decision and apply again with the same lender. 

Title Loan Refinance – Benefits 

If you’re wondering why you would refinance auto title loan, we’re here to tell you that refinancing your vehicle title loan actually has some pretty significant benefits, including:

Better Terms

The first and most significant benefit of title loan refinancing, based on what we already said, is the fact that you can get better conditions for the remainder of your repayment term. 

As part of the refinance process is recalculating the loan, you might find that you actually qualify for a lower interest rate, resulting in lower monthly payments. This is especially true for those who earlier could’ve been considered a high-risk borrower but have somehow improved their situation. Lower monthly payments also mean that you have better cash flow and you can set more money aside. 

If you don’t qualify for lower interest rates but are struggling to pay off your debt, refinancing can still be helpful, as you might be able to extend the duration of your repayment period, allowing you to better manage your finances.

Reduced Stress and Anxiety 

Stress and anxiety are normal when you’re not sure if you’ll be able to keep up with the loan monthly payments. However, in the long run, they can cause more severe consequences on your health, so it’s best to do all you can in order to reduce them. 

Refinancing your current loan and getting more favorable terms – whether it’s more time to pay it off or a lower amount you have to pay each month – can significantly help with that, especially if the new terms are a lot more fitted to your budget. 

Knowing your new repayment plan won’t make a dent in your pocket (or at least not one as big as before) can tremendously help with both anxiety and stress.  

Better Customer Service 

If you have a bad experience with a lender after you’ve already signed the contract to the point where you want to change them to someone else, getting out of the lending agreement is not easy – not only will you have to pay the amount you own, but in some cases also additional fees. 

Refinancing your title loan gives you the opportunity to move to a completely different lender with better customer service without major consequences. 

What Can Cause Worse Repayment Terms When You Refinance Car Title Loan? 

As mentioned, in most cases, the terms you get after refinancing your loan are better – however, in rare cases, the opposite might happen, and you could end up with worse conditions than you previously had. 

One of the most common situations in which this happens is when your vehicle loses value over time. For example, let’s imagine that when you first got the car title loan, your vehicle was worth $25,000, and you were able to borrow 50% of its value, which is $12,500. However, since you’ve gotten the loan, the particular model you own has dropped in value significantly, and now the same car is worth $12,000. Since most lenders offer loans up to 50% of the vehicle value, in this case, that would be $6,000 instead of the previous $12,500. Now, let’s say the remaining amount you still have to pay off is $7,000. 

So what happens in this situation? It all depends on the lender and what their terms are in this type of situation. One solution is that you might have to pay the difference between the old amount granted and the new loan amount out of pocket – in this case, $1,000. Or, you might receive higher monthly payments to make up for the difference. 

The Bottom Line

Have you been having trouble keeping up with your vehicle title loan payments? Or maybe you want to explore your options when it comes to lowering the title loan bill each month? If the answer is yes to either of these, title loan refinancing is definitely something you should consider looking into. 

With title loan refinancing, you’re essentially taking out a new loan to pay off the old one. Those typically have better terms and often more favorable interest rates. 

However, make sure that before you make any decision, you think carefully about whether it’s the right choice for you – while in many cases, it does end up being the best solution, every situation is different, which is why you shouldn’t base the decision on someone else’s experience. 
At Titlelo, we work with a network of reliable lenders that can help you refinance your loan and improve your repayment terms. Get in touch with us today, and let us be the middleman between you and lenders that you can trust.