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Understanding This Difference Can Be Helpful if You Have a Title Loan
People take out loans for many reasons. Financial assistance can be crucial if you need help paying your bills or covering an unexpected expense. However, finding the right option for you can be challenging. For example, traditional bank loans may only lend to someone with a good credit score. On top of that, they may implement loans with high-interest rates, which can add more stress than they relieve.
If you need financial help, applying for a title loan could be your best option. The application process can be convenient and qualified borrowers may receive access to money within one business day!
However, if your circumstances change, you may need to refinance your loan or apply for a title buyout. It’s essential to understand the difference between these options if you currently have a title loan. Below is what you can expect from a title loan application and what happens if you need to refinance the funding!
Why Should I Refinance a Title Loan?
Title loans can be paid off in two ways: through a title buyout or refinancing. Refinancing a title loan means you make a new deal with a different lender. This option can be standard for people who can’t make their payments but want to avoid defaulting on the loan. This option can also be good for both the customer and the lender because it allows you to renegotiate your loan terms and provides a loan company with new business.
When borrowers refinance, they take out a new loan to repay the existing one. Borrowers can reduce their interest rate or change their loan terms by refinancing.
The worst thing you can do when you have a title loan is not pay the money back. Lenders can legally repossess your vehicle and sell it to compensate for lost profit if you stop paying your loan.
Thankfully, this is the last resort that any lender typically wants to take. If you struggle to make payments, contact the lender immediately to discuss your options.
What Is a Title Buyout?
In a title buyout, the lender pays off the outstanding balance of the loan and transfers ownership of the property to the new lender. As a result, the new lender has full legal rights to the property instead of the borrower. However, this term is often misused during a title loan agreement with a car that has yet to be paid off. While borrowers can potentially receive a title loan on a refinanced car, this term is not called a buyout.
What is the Difference Between Title Buyout vs Refinancing?
A title loan buyout is a business deal involving two lending companies. During a title buyout, one company can purchase loans from another, often at a discount. The borrower is not involved in this transaction.
On the other hand, refinancing a title loan does involve the borrower. When you refinance a title loan, you can choose to work with a new lending company, renegotiate your loan terms, and potentially receive lower interest rates.
What Are the Requirements for an Online Title Loan?
The requirements for an online title loan can be relatively accessible to people from all walks of life! However, you must meet this criterion before you begin your application. You may not qualify for funding if you can’t meet one of them. For a title loan, you must be an adult at least 18 or older, have a qualifying vehicle title in your name, have a car with positive equity, and show proof of a steady income.
When you apply for a title loan, you must have a qualifying vehicle title in your name since a lien is placed on it as collateral. You cannot inquire about funding without a vehicle title in your name! Contact the DMV in your area if you need help transferring one into your name.
You also need a car with positive equity to receive title loan approval. Car equity is the value of your vehicle minus how much you still owe to a bank or dealership. It’s best to apply for this option if your car is already paid off or close to being paid off because it means it will have positive equity.
Lenders also must verify that a borrower has some form of steady income before approving them for a loan-its the law. This law is a federal requirement to protect customers from predatory lending practices, like entering the debt cycle! The good news is that many income forms may be acceptable besides working a traditional job, and you can use workers’ compensation, Social Security benefits, self-employment, or settlement income. Contact a title loan agent if you have questions about the requirements for an online title loan today!
Apply for a Title Loan From the Comfort of Your Home
Refinancing could be helpful if you’re worried about paying off your title loan. Not only does this allow you to renegotiate, but it can also help you avoid car repossession by the lender!
Apply for a title loan online today using your smartphone or computer. You don’t need to visit a physical location, which can be convenient for people experiencing an emergency. Just gather a few documents and apply online or over the phone today!