Shir Amram

Written by: Shir Amram

In a Nutshell

You can get a car title loan even if there’s a lien on your vehicle. Important things to remember:

  1. Your car has enough value.
  2. Your car title is free from certain encumbrances.
  3. You get consent from the first lienholder.

Refinancing and picking a cooperative lender are key.

However, it’s crucial to be aware of the high interest rates and the risk of repossession that accompany such loans, and to understand the relevant state laws and regulations.

Understanding Title Loans and Liens

Title loans are essentially short-term cash loans secured against your motor vehicle. Your vehicle serves as collateral, making it a secured loan. When you apply for a title loan, the lender puts a lien on your car’s title, meaning they have a legal right to it until you repay the loan. Despite the lien, you can still drive your car during the repayment period.

What Does it Mean to Get a Car Title Loan With a Lien?

If there’s already a lien on your car, perhaps from a previous loan or some other financial obligation, it creates a ‘cloud on title’. This needs to be resolved before the vehicle can be sold or transferred. But does this mean you can’t get a title loan? Not necessarily. In fact, it’s still possible to obtain a car title loan with an existing lien.

The Mechanics of Second Lien Title Loans

So what exactly are second lien title loans? Well, a second lien title loan is essentially a loan that you take out on a vehicle that already has a lien, using the same vehicle as collateral. The loan amount hinges on the vehicle’s equity. It must clear the existing lien and provide the borrower with any extra cash they need, pending lender approval.

However, there’s one thing that borrowers of second lien title loans need to be aware of. You won’t have the physical copy of the vehicle’s title due to the existing lien. And if you fail to repay the loan, you’re at risk of having your vehicle repossessed. So, it’s crucial to understand the mechanics of second lien title loans and the risks involved before you apply.

Navigating Multiple Liens

Navigating multiple liens on a vehicle can be challenging. Here are some key points to consider:

  • Not all states permit multiple active liens on a vehicle. Knowing your state’s specific regulations is essential.
  • Liens can arise from various sources, such as unpaid child support or state taxes, and these must be cleared to obtain full ownership of the vehicle.
  • When considering a second title loan, the amount you can borrow is influenced by the vehicle’s current value, which may have depreciated from its original worth.

Eligibility Criteria for a Title Loan with an Existing Lien

If you’re considering a car title loan but there’s already a lien on your car, you’ll be relieved to know the process is simpler than expected. To qualify, ensure your car title is free from certain encumbrances, like a salvage label or damage. The steps include getting consent from the current lienholder and having your vehicle inspected.

  1. Assessing Your Car’s Equity- To check if you’re eligible for a title loan, calculate your car’s equity—simply subtract what you owe from the car’s market value. Positive equity means you could get a title loan.
  2. The Role of the First Lienholder- If there is already a lien on your car, you’ll need the first lienholder’s permission for a second title loan. Without it, you can’t proceed. Some title loan lenders may specialize in these situations, but consent is mandatory.

Strategies for Securing a Title Loan with a Lien

To secure second lien title loans, you must demonstrate positive equity in the vehicle and provide evidence of steady income. Refinancing your current title loan is one approach that could work in your favor. Additionally, finding the right title loan lender is another crucial aspect to consider.

Refinancing Your Current Title Loan

Refinancing your car title loan can lead to improved terms, such as lower interest rates, reduced monthly payments, and access to more funds. The process involves settling your existing title loan with a new agreement through a refinancing company. It’s crucial to select a lender based on their transparency, competitive rates, no early payoff penalties, and the capacity for additional borrowing.

Finding the Right Title Loan Lender

Finding a title loan company willing to work with a vehicle that has an existing lien is critical. Look for lenders who offer favorable terms that match your needs. Research their reputation, read reviews, and understand their loan terms. Comparing various title loan lenders is a wise step to securing the right title loan with a lien.

Advantages and Risks of Lien Title Loans

Advantages of Lien Title Loans

Auto title loans can provide a financial lifeline for individuals who may not have access to other forms of credit, such as a financed car. These loans offer the advantage of:

  • Immediate Access to Funds: Lien title loans can provide same day financial assistance, which can be crucial during emergencies where immediate cash is needed.
  • Credit Flexibility: These loans are often accessible to individuals with poor or no credit history, as the loan is secured by the vehicle.
  • Continued Use of Vehicle: Borrowers can continue to use their vehicle while repaying the loan, which means not having to sacrifice mobility for financial assistance.
  • Straightforward Application Process: The process for applying for a lien title loan is typically less complicated and faster than applying for unsecured loans, which can require extensive credit checks and processing time.

Understanding the Risks of Lien Title Loans

While lien title loans can offer immediate financial assistance, it’s imperative to acknowledge the inherent risks:

  • High Interest Rates: These loans can trap borrowers in debt due to steep rates.
  • Short Terms: Quick repayment can lead to missed payments and fines.
  • Repossession Risk: Non-payment risks vehicle loss.
  • Extra Fees: Delays in payment may incur additional costs.

Example Of How You Can Get Title Loans With A Lien

Let’s consider a hypothetical scenario to illustrate how you might obtain a car title loan on a vehicle that has an existing lien. Imagine you own a car valued at $10,000, but you still owe $5,000 on that vehicle. Here’s how you could potentially secure a title loan:

  1. Determine Your Vehicle’s Equity: First, you assess the equity in your vehicle. Since the car is worth $10,000 and you owe $5,000, you have $5,000 of equity.
  2. Find a Lender: Next, you search for a title loan lender who is willing to work with vehicles that already have a lien. After some research, you find a lender who specializes in such loans.
  3. Apply for the Loan: You submit an application to the title loan company, providing all the necessary documentation, including proof of your income, the existing lien, and your vehicle’s value.
  4. Lender Processing Your Application: The lender evaluates your application, checks the car’s value, and confirms your ability to repay the loan.
  5. Loan Approval and Lien Payoff: If approved, the lender agrees to pay off your existing $5,000 lien and gives you a new title loan based on your $5,000 equity. The new loan will have its own terms and interest rate.
  6. Receive Your Funds: After the existing lien is paid off, you receive the cash you need, and the lender places a new lien on your vehicle.
  7. Repay Your New Loan: You make regular payments on your new title loan according to the agreed terms until it is fully repaid, at which point the lien is removed from your vehicle title.

This example is a simplified representation of the process and doesn’t account for all possible fees or nuances. It’s essential to understand the terms and conditions of any loan agreement before proceeding.

Documents You Need for a Title Loan With a Lien

To apply for a lien title loan, you’ll need the following:

  • A valid government-issued ID
  • Evidence of the existing lien
  • Vehicle photos to verify condition and ownership
  • Proof of residence
  • Current vehicle registration in your name
  • Proof of insurance
  • Proof of income

Legal Disclaimer

Before considering title loan with lien, be advised that state regulations vary significantly. It is imperative to understand the laws in your jurisdiction. For instance, Virginia has stringent guidelines governing car title loans, requiring detailed disclosures and imposing limits on collection practices.

In contrast, California has distinct regulations that may influence the feasibility and conditions of obtaining title loan with lien. Ensure you are well-informed of your state’s specific legal requirements to avoid any legal complications.


In conclusion, while getting a title loan with a lien might seem daunting at first, it’s entirely possible with the right information and preparation. Understanding title loans, liens, and your vehicle’s equity, along with the role of the first lienholder, is key. It’s also vital to weigh the pros and cons, prepare your application meticulously, and understand your state’s specific regulations.

For additional assistance or to explore how to get a title loan with an existing lien, feel free to give us a call at 888-700-8900. Our knowledgeable representatives are ready to answer any questions you may have and guide you through the process to get a title loan that suits your needs.

If you’re considering a second lien title loan, applying is simply a non-binding step to evaluate your financial alternatives.

Frequently Asked Questions

Can I Get a Title Loan with a Lien Online?

Yes, getting an online title loan even if your vehicle already has a lien is possible. It’s usually harder to find online lenders for second lien title loans, but it’s not out of the question. If you’re looking to refinance your current title loan for a better deal or you need a title loan for a car that’s not fully paid off, you have choices.

Can You Have More Than One Title Loan in Tennessee?

No, Tennessee law does not allow multiple title loans on the same vehicle simultaneously. You can, however, have separate loans on different vehicles.

What is a Second Lien Title Loan in Texas?

A second lien title loan in Texas is a loan on a vehicle that already has a lien, using the vehicle’s equity as collateral. The vehicle must have sufficient equity to cover both the existing and new loan amounts. Texas law has specific rules for these loans, so consulting with a lender or legal advisor is recommended.

What are The Requirements for a Title Loan in California?

To get a car title loan in California, borrowers need to fulfill specific criteria and provide documentation, including:

  1. A clear vehicle title in their name
  2. Proof of income
  3. Proof of residence
  4. A valid government-issued ID
Shir Amram

Written by

Shir Amram

Shir Amram is a senior loan officer at Montana Capital Car Title Loans. With over 10 years of experience in the finance industry, Shir has been an asset in her role and has contributed significantly to our company’s success, Shir’s academic background in economics and financial knowledge helps us fulfill our education mission as she creates a valuable content to our blog.