A car title loan could be just what the doctor ordered when you need to get some quick cash with minimal hassle. In some situations, though, you might need to juggle a few things around to make ends meet after you get the loan. The good news is you can refinance that title loan to get new and ideally better terms.
The most common reasons to apply for a title loan refinance include:
1. Seeking a better interest rate.
2. Lowering your monthly payment.
3. Extended the term of the loan to get more time to pay.
How to Refinance a Title Loan
The refinance process is quite similar to the steps needed to get a title loan in the first place. You can work with your current lender or seek out a new lender altogether. Either way, you want to make sure you’re going to come out ahead as far as your goals for the refinance is concerned, whether it’s to lower your monthly payment, get a better interest rate or gain more time to repay the loan.
The first step is to research various lenders online to see which ones can help you meet your refinance goal. Next, you’ll want to gather all the pertinent documentation before applying. Just as when you applied for the original loan, you’ll need to provide photos of the car (if applying online or by phone), title documentation in your name, proof of residence and proof of income. You’ll also need to submit a copy of your current loan agreement.
Generally, your car will likely have higher mileage than it did when you got the first title loan. This could have an effect on the amount of money you’ll qualify to borrow. You must make sure you can get enough to pay off the original loan and get the new terms you’re after. Plugging the details of your car into an online title loan calculator can help you figure this out.
With this information in hand, you’ll be ready to complete the loan application.
What to Look for in a Lender
Different lenders have different policies. When considering title loan refinance, you want to make sure you’re getting into a situation that will prove more beneficial in the long run.
Factors to look for include:
- No prepayment penalties — paying your loan off early won’t cost extra.
- No surprises like balloon payments at the end of the loan
- Each payment reduces your balance and covers interest
- Lowest interest rates possible
- Good customer service, seven days a week
- The ability to apply and make payments online
- A smartphone app to help manage your loan
- Loan terms you can shape to fit your situation
- You can retain possession of the vehicle while you repay the loan
- Fast approval and funding within 24 hours or less
What if I Have Bad Credit?
Just as with the original loan, the title to the vehicle will continue to serve as collateral. As long as there is sufficient value in the car, most title loan issuers don’t really worry about your credit history. They’re more interested in the fact that you have a valuable car and that your job gives you the ability to comfortably repay the loan.
Applying for a title loan can actually be a benefit to your credit score. Title loan issuers often don’t do credit score inquiries like banks and credit unions do. This can help maintain your credit score, as each lender inquiry actually lowers your credit score by around five points, according to Experian, one of the leading credit reporting bureaus.
Refinancing a Title Loan IS Doable
So yes, you can refinance a title loan. Even better, the process of doing so is just as simple as getting a title loan. The tips listed here will help you make sure the refinance you choose puts you closer to your financial goals, rather than making them more difficult to reach.