Second Lien Title Loans

If a person chooses to finance their vehicle purchase, the lender will put a lien on the title. Once the loan has been paid off, that lien will come off. Typically, title lenders won't make loans to those who haven't paid off their original loan in full. However, some lenders will allow what is known as second lien title loans.

What's a Lien?

A lien is a way for a lender or other party to protect its interest in a property or anything else that is used as collateral. In the event that a loan isn't repaid, the lender can use their lien rights to either compel payment or take possession of the property used as collateral. Generally, parties that have a lien don't want to compete with others who may also have a claim to an asset used as collateral. That is why second lien title loans aren't offered by all lenders.

How Will This Impact My Loan Offer?

When looking for title loans in Miami FL, it is important to know that a loan amount is generally tied to the value of the car. If you still owe money on an auto loan, you may be limited to borrowing a percentage of the equity that you have in the vehicle. For instance, lets say that you owed $3,000 on a vehicle that was worth $5,000. In such a scenario, you would likely be offered a percentage of $2,000 as opposed to the $5,000 that the car is worth.

Are Credit Requirements Different for Such Loans?

The credit requirements for second lien title loans are generally the same as any other title loan. This is because the equity in the vehicle is still being used to make the loan. In most cases, a credit check will not be performed or play much of a role in approving an application. However, a lender may check to see if an applicant is employed or if that person has a regular income.

What Information Do I Need to Show a Lender?

When applying for second lien title loans, it may be necessary to show proof of the original lien as opposed to proof of a clear title. You will also likely need to show a valid ID indicating that you are 18 or older or otherwise eligible to receive such a loan. It may also be necessary to provide basic information such as your name, physical address and phone number or email address.

Will My Other Lender Allow a Second Lien on the Title?

If you have any questions about whether you can add a lienholder to the title, it may be worthwhile to review the contract you signed when taking out the first loan. If the first lienholder has any objections, it may be necessary to pay off any obligation to that party. It may also be possible to transfer the lien to another lender that won't have any objection to what you want to do.

Will My Vehicle Need To Be Inspected?

As a general rule, your vehicle will need to be inspected prior to obtaining loan approval. In most cases, the inspection will consist of taking pictures of the vehicle and otherwise confirming its condition. A lender may also provide the option of submitting pictures online to speed up the loan approval process.

What Happens If I Don't Pay the Title Loan Back?

Your car may be repossessed if you fail to repay the title loan as agreed. This may be true even the title lender is the junior lienholder on the title. It is likely that you will need to continue making payments to your other lender or party that holds the first lien on the car after a repossession. Those who don't think that they can make their payment on time should contact a lender's customer service department immediately. This may make it possible to extend or flip the loan and avoid a repossession.

Those who are looking to finance a business, go to school or pay for car repairs may want to consider getting a title loan. Whether the title lender has the first or second lien, it may be possible to get hundreds or thousands of dollars in a matter of days. This may be true regardless of a person's credit score or history.