A title loan refinance may provide an alternate solution for borrowers who have an existing loan with a payment that is very difficult to make on time. Additionally, some borrowers make a number of payments for months without significantly lowering the principal loan balance. This can be frustrating.
Some title loans can have very high interest rates and additional fees that may result in a loan that is very costly and difficult to repay. The ability to reduce both your monthly payment and total cost is something a title loan refinance may be able to provide.
Often car title loans are used for urgent or emergency expenses and some borrowers simply don’t have the time to find the best title loan with reasonable payments while dealing with the emergency.
This can, and often does, lead to many borrowers, in a hurry to solve a financial problem, to simply go to the closest title lender or visit the first search result and move forward with them. The result of this rushed title loan acquisition can be a very high interest loan that is very difficult to repay.
Finding the best online title loan, with lower payments and no fees, is not always an easy thing to accomplish. This is especially true when you are in a hurry and don’t have time to compare multiple lenders.
In these cases consider a title loan refinance. This can be a good way to get a better deal on your existing loan, now that the pressing financial issue no longer exists.
What is a Title Loan Refinance?
A title loan refinance is a way to renegotiate your loan to get a lower interest rate or different term to make repayment easier and to decrease the total repayment cost. This can be done both with your existing lender (in some cases) or with a different lender.
Essentially, you refinance your title loan at a rate that is lower than your current rate. You can also change the length of your loan, if that is permitted in your state. This makes it easier to repay and ultimately ends up saving you money when done right.
It is important to note that refinancing a title loan is not permitted in every state. To find out if you can refinance your title loan simply apply.
Type of Title Loans
Before looking into whether or not refinancing your loan makes sense, it is important to understand the two main types of title loans – those with a single payment and those with monthly installments. Generally, refinancing a title loan with monthly installments is the more common type.
This assumes you are not rolling over your single payment title loan; if that’s the case a refinance may be possible for a single payment title loan to avoid multiple rollovers. As we’ve mentioned roll overs can get vey costly.
Monthly Installment Title Loans
Title loans with monthly installments are usually amortized over the loan period. This means the total loan cost is broken into equal monthly payments consisting of both interest and principal. Many loans like car loans and mortgages are amortized.
Title loans can be amortized over a period of any where from a few months to over a year. Amortizing a high interest loan over a longer period often results in an exponential increase in interest costs.
If you signed up for a high interest loan with a long term, then refinancing may be a good idea. Doing so can significantly reduce your total loan cost.
Costs of Monthly Installment Loans
As mentioned, amortizing a title loan over a longer period can increase costs significantly; especially if the interest rate is high. To illustrate this, take a look at a $3,000.00 title loan, amortized over a 6, 12, 24, and 36, month period.
To further provide an idea of how the interest rate effects the cost we included both a 96% and a 150% title loan. There are many title loans with interest rates higher, in some cases much higher than 150%.
To illustrate the costs associated with these loans, and the difference between them and new one at a lower rate, we created a refinance calculator. This allows you to get an idea of what they can potentially save with a title loan refinance. It will require time and effort so it does need to be worth it.
Benefits of a Title Loan Refinance
The reason for taking the time and effort to refinance a title loan is the benefits received from refinancing. These benefits include:
- Lower Interest Rate
- Reduced Total Loan Cost
- More Affordable Monthly Payment
- Better Title Loan Company
The main benefit is a lower monthly payment and savings. This makes the loan easier to repay and ultimately more affordable. The main reason for wanting a title loan refinance is to lower the interest rate and therefor lower the monthly payment and total cost.
There are title loan companies today offering title loans at much better rates than many of the larger lenders charging the maximum allowable rate in that state. Many borrowers rush in to these loans and are now looking for a better alternative.
How Much a Refinance can Save
The purpose of a title loan refinance is to save money and lower payments. Before moving forward with one most borrowers would like an idea of how much they could save. This allows you to determine whether or not the refinance is worth the time and effort.
Just like with a regular title loan, a cost benefit analysis makes sense for a refinance as well. The benefit (amount saved) should outweigh the cost (time and effort spent) for the title loan refinance to be worth it.
Title Loan Refinance Savings Calculator
The refinance savings calculator provides an estimate of how much you might be able to save. This assumes you know your current loan amount and interest rate, and have an idea of what interest rate you can get with a refinance.
Simply enter the values and take a look at the results. To get a more accurate quote simply apply online when ready.
How to Refinance a Title Loan
Refinancing a title loan is generally a fairly easy process, similar to the process of getting the title loan in the first place. Contact the lender you want to deal with and apply for a title loan refinance with them.
The application will be reviewed and either approved or denied. In some states refinancing a title loan is not permitted. Once your application is approved, the loan will be processed similar to the way it was processed when you got the title loan. Make sure to have all of your information available to ensure the process can be completed.
You will be provided with a loan agreement. Make sure to read and understand the entire loan agreement. This will define your payment schedule, interest rate, fees included late fees, loan default definition, and other critical information about how your loan will be governed.
If you still need more information check out our post on how to refinance a car title loan.
Title loans are secured loans with the collateral being the vehicle used for the loan. This means defaulting on the loan can result in repossession. This is one of the reasons for refinancing the title loan and the last thing any vehicle owner wants.
Make sure to make your title loan payments on time to avoid any possibility of default. Paying on time also avoid late fees and extra interest charges.
Online Title Loan Refinance Options
The same online options are available for refinances as they are for getting new title loans. This includes completely online with no inspection and no store visit. These options may have an electronic title loan agreement. Regardless, make sure to read the loan agreement in full before signing.
The fact that you already have a title loan may make the process of refinancing easier. You should have all of the information you had when you applied for the original loan ready when applying for the title loan refinance online.
A title loan that is too expensive and/or simply not affordable is not a good situation. It may be possible to improve things by considering refinancing the loan.
Finding a lower rate lenders, with better interest rates and lower or no fees, can significantly reduce your title loan payment and cost. For those stuck with a very high interest loan it is definitely something worth looking in to.