How 2nd Lien Title Loans Work
Do you have an existing title loan that is becoming harder to pay each month? Or maybe you need more cash than when you first applied? While most people no longer need to borrow money after their initial title loan, wouldn’t it be great if you could borrow money even if there’s already a primary lienholder on the car’s title? That’s where 2nd lien title loans come in!
Second lien title loans are generally considered the last option to borrow money with your vehicle as collateral. Yes, most of the equity from your car is already being used as collateral for the primary title loan. Still, you can often use extra collateral from your vehicle for any financial emergency.
Let’s say you initially took out a title loan of $5,000 on a vehicle valued at $15,000. That primary title loan uses a portion of the vehicle’s value as security. However, there’s still value remaining, and there’s nothing wrong with putting it to work as collateral for a loan! In this case, you may be able to borrow upwards of $3,000 with a second lien title loan, and much like the first time you applied, there’s little to no credit check. Remember that second lien title loans often aren’t an option as your initial lender may not allow any other liens on the vehicle, but there’s no risk in applying to see if you qualify. Call Florida Title Loans at 888-986-8505, and we’ll let you know if you qualify for a 2nd lien title loan!
With second lien title loans, a borrower takes out a second title loan while another secured loan is outstanding. The second lien is placed on the borrower’s car, and the lender agrees to hold the title as collateral for the loan. In an ideal situation, you would place multiple liens on your vehicle, but unfortunately, there are a few reasons why this can be difficult.
Other types of 2nd lien title loans allow you to pay off the original lender while you’re still allowed to add a second lien onto the title. This is often referred to as a title loan buyout. In this situation, your prospective lender will buy out the original loan and offer you new lending terms and hopefully a lower interest rate.
Risks Associated With Getting A 2nd Lien Title Loan
There are a lot of risks involved with a second lien title loan, mainly because you’re taking on more debt and further putting your vehicle at risk of repossession! Also, because 2nd liens are riskier for lenders, the interest rates are much higher than those on first liens. This means that you’ll end up paying more in interest over the life of the loan, making it difficult to pay down the primary loan amount.
If you default on your 2nd lien title loan, there’s a good chance your lender will repossess your vehicle. This is because there’s already another lien on your car, which means they have a right to take back the collateral if you don’t repay the loan. This can lead to a situation where you no longer have a vehicle and still owe money to pay down the loan balance after the vehicle is auctioned.
Another risk with second lien title loans is that each lender will make claims on your vehicle, which makes these loans difficult to get approved for in the first place. While there can only be one primary lien holder on the car, that’s often unclear in some states. The last thing you want is a situation where multiple title pawning companies say they have first rights to your car.
Benefits Of A Second Car Title Loan
Even though a second title loan is hard to get and not something we even recommend, there may be some benefits for you if you can get one. A 2nd lien car title loan can give you the money you need quickly and with no hassle. The process is usually straightforward, with funding in less than 24 hours. Another benefit is that 2nd lien title loans can often be easier to qualify for than bad credit title loans. The lender has the collateral they need to secure the loan, so they’re less worried about your ability to repay.
While there are some benefits from 2nd lien auto title loans, the risks sometimes outweigh the benefits, and it’s up to you to determine if you want to deal with the headaches that come with a 2nd lien loan. To determine if you genuinely need the cash and can’t qualify for other less risky loans then, you should consider some key questions.:
How much money do you need, and how quickly do you need the funds?
How much can you afford to pay back on a 2nd loan?
What happens if you default on the loan and your vehicle is repossessed?
Will your original lender be okay with adding a second lender to the car’s title?
Here Are The Steps To Get A Second Lien Title Loan
1. Find a reputable lender who offers 2nd lien title loans. Some local equity lenders in FL offer these types of loans in addition to their typical title loans.
2. Apply online with Florida Title Loans or by calling 888-986-8505. We’ll process your application and send your loan request to a local lender that offers 2nd lein title loans
3. Sign the loan docs after your application is underwritten and you’ve completed the inspection. A 2nd lien title loan typically requires more documents and takes longer to underwrite and fund. But if everything checks out, you can have cash for your vehicle’s equity in 24 hours.
What To Do If You Can’t Get A 2nd Lien Title Loan
Additional options exist if you can’t be approved for a 2nd lien title loan. One option is to try and refinance your existing title loan with another lender that offers a lower interest rate. This can be not easy, and it’s likely not an option if you’re behind on the payments, but it’s possible if you can find a company offering more competitive rates. You can also see if your original lender is willing to have their loan bought out. With a title loan buyout, a new lender in Florida buys out your existing lender and you end up with a new interest rate and payment term. Most of all, you can get a fresh start on your loan and potentially avoid a vehicle repossession.
These loans can be challenging to obtain, and most title loan companies in Florida pass on loans if you already have a lienholder on your car’s title. However, some options may be available if you still have equity in your vehicle. Call 888-986-8505 or apply online with Florida Title Loans to see if you qualify for a second lien title loan!