Can I Get a Title Loan on a Financed Car in Texas?
Quick Answer
Yes, you can get a title loan on a financed car in Texas if you have sufficient equity – typically 25-40% ownership. Your lender will work with your current lienholder to place a second lien on the title, or in some cases, refinance your existing auto loan. The more equity you have, the larger the title loan you can receive.
Get Your Car Loan
Related Information
Understanding Equity in a Financed Vehicle
What Is Vehicle Equity?
Equity =
- Current Vehicle Value – Remaining Loan Balance
Example:
- Your car’s current value: $15,000
- Your remaining auto loan balance: $9,000
Your equity:
- $6,000 (40%)This equity becomes your borrowing power for a title loan
How Much Equity Do You Need?
Minimum equity requirements by lender:
Lender Type
- Conservative Lenders
Minimum Equity Required
- 40-50% equity
What You Can Borrow
- 50-75% of your equity
Lender Type
- Standard Lenders
Minimum Equity Required
- 30-40% equity
What You Can Borrow
- 60-80% of your equity
Lender Type
- Flexible Lenders
Minimum Equity Required
- 25-30% equity
What You Can Borrow
- 70-90% of your equity
Most common:
- Need at least 30% equity to qualify
Example:
- If your car is worth $20,000, you need at least $6,000-$8,000 in equity (meaning you owe $12,000-$14,000 or less)
How much equity do I need for a title loan?
Calculating Your Equity
Step 1: Determine vehicle’s current value
- Use KBB.com (Kelley Blue Book)
- Check NADA.com (National Automobile Dealers Association)
- Get estimate from Edmunds.com
- Average the three values
Step 2: Find your loan payoff amount
- Check your most recent auto loan statement
- Call your lender for exact payoff quote
- Check online account (if available)
- Note: Payoff ≠ remaining payments (may include interest)
Step 3: Calculate equity
- Vehicle Value – Loan Payoff = Your Equity
Online calculator: Use EZ Car title loans equity calculator for instant estimate
Calculate your title loan amount
Most common:
- Need at least 30% equity to qualify
Example:
- If your car is worth $20,000, you need at least $6,000-$8,000 in equity (meaning you owe $12,000-$14,000 or less)
How much equity do I need for a title loan?
How Title Loans on Financed Cars Work
Option 1: Second Lien Position
Most common method:
- Your current auto lender remains in first lien position
- Title loan lender takes second lien position
- You make payments to BOTH lenders
- When title loan is paid off, second lien is removed
Example:
- Auto loan payment: $350/month
- Title loan payment: $200/month
Total monthly: $550Requirements:
- Current on auto loan payments
- Auto lender allows second liens (most do)
- Sufficient equity to justify second lien risk
Option 2: Refinancing Your Auto Loan
Alternative approach:
- Title lender pays off your existing auto loan completely
- You receive additional cash based on equity
- One new loan replaces old auto loan
- One monthly payment instead of two
Example:
- Current auto loan balance: $10,000
- Car value: $18,000
- Equity available: $8,000
- Title lender pays off $10,000 + gives you $3,000 cash
- New loan: $13,000 with one payment
Pros:
One payment, may lower monthly cost
Cons:
Higher interest rate than original auto loan, longer payoff timeline
Option 3: Buy Out Existing Loan
For high-equity situations:
- You have significant equity (50%+)
- Title lender offers loan large enough to pay off auto loan completely
- Plus additional cash to you
- Similar to refinancing but structured as title loan
Best for:
Borrowers with older vehicles, mostly paid off
Equity Requirements by Situation
High Equity (50%+ Ownership)
Your situation:
- Car worth $20,000
- Owe $8,000 or less
- Equity: $12,000+ (60%+)
Borrowing power:
- $6,000-$9,000 title loan possible
Lender perspective:
- Low risk, strong collateral
Options available:
- All three options (second lien, refinance, buyout)
Moderate Equity (30-50% Ownership)
Your situation:
- Car worth $20,000
- Owe $10,000-$14,000
- Equity: $6,000-$10,000 (30-50%)
Borrowing power:
- $2,500-$6,000 title loan possible
Lender perspective:
- Moderate risk, acceptable
Options available:
- Primarily second lien, possibly refinance
Low Equity (25-30% Ownership)
Your situation:
- Car worth $20,000
- Owe $14,000-$15,000
- Equity: $5,000-$6,000 (25-30%)
Borrowing power:
- $1,500-$3,500 title loan possible
Lender perspective:
- Higher risk, marginal
Options available:
- Second lien only, limited lenders
No Equity or Upside-Down (Owe More Than Value)
Your situation:
- Car worth $20,000
- Owe $21,000+
- Equity: Negative
Borrowing power:
- Cannot get title loan
Why:
- No collateral value to secure loan
Alternative:
- Personal loans or wait until you build equity
Working with Two Lenders
Your Current Auto Lender
Their role:
- Maintains first lien position (priority claim)
- Must approve second lien (in most cases)
- Receives payoff if you default on either loan
Most auto lenders allow second liens from:
- Banks
- Credit unions
- Auto finance companies
- Title loan companies
Rare exceptions:
Some credit unions and small lenders prohibit second liens
Your Title Loan Lender
Their role:
- Takes second lien position (subordinate to auto lender)
- Assumes higher risk (paid second if repossession)
- Charges higher interest to compensate for risk
They will verify:
- Your current loan balance
- Payment history with auto lender
- Whether auto lender permits second liens
- Vehicle’s actual value
Coordination Between Lenders
Title lender will:
- Contact your auto lender to verify balance
- Request lien release authorization
- File paperwork with Texas DMV for second lien
- Provide you with copies of all documents
You don’t need to coordinate:
Lenders handle this directly
Timeline:
1-3 business days for lien verification and processing
Required Documentation
What You’ll Need to Provide
Standard title loan requirements:
- Valid government ID
- Proof of income
- Proof of Texas residence
- Vehicle registration
- Proof of insurance
Additional for financed vehicles:
- Recent auto loan statement (showing balance)
- Auto lender contact information
- Loan account number
- Payment history (last 3-6 months)
- Loan contract (if available)
The title itself:
Your current lender holds this; title lender will coordinate
Verification Process
Title lender will verify:
- Payoff amount (call your auto lender)
- Current value (inspect vehicle, check market data)
- Payment history (on-time payments boost approval odds)
- Title status (confirm vehicle not salvage, no other liens)
You must be current on auto loan – late payments may disqualify you
Impact on Your Current Auto Loan
Your Auto Loan Doesn’t Change
What stays the same:
- Monthly payment amount
- Interest rate
- Payment due date
- Loan term
- Auto lender relationship
Second lien doesn’t modify your existing auto loan terms
You Must Stay Current on Both Loans
Critical requirement:
- If you default on auto loan: Auto lender can repossess
- If you default on title loan: Title lender has rights to repossess
- If you default on either: Both lenders notified
Default consequences:
- Vehicle repossession
- Both lenders can claim proceeds from sale
- Auto lender paid first (first lien priority)
- Title lender paid second (if funds remain)
- You responsible for any remaining balance to either lender
Manage carefully:
Only borrow what you can afford to repay on top of existing payment
Can Impact Future Refinancing
If you try to refinance auto loan later:
- New lender will see second lien on title
- May affect refinancing approval or terms
- Must pay off title loan OR get new lender to accept subordinate position
Plan ahead:
Consider whether you’ll want to refinance auto loan before taking title loan
Interest Rates and Costs
Higher Rates for Second Lien Loans
Why rates are higher:
- Greater risk for lender (second position)
- Smaller loan amounts (lower revenue)
- More complex administration
Typical rates:
- First lien title loans: 5.99%-25% APR
Second lien title loans: 15%-35% APRCompare to:
- Your auto loan: Likely 3%-8% APR
- Personal loans: 8%-36% APR
Important:
- Weigh the cost vs. your need for cash
Total Monthly Payment Burden
Calculate carefully:Example:
- Auto loan payment: $400/month
- Proposed title loan: $3,000 at 25% APR for 12 months = $283/month
Total:
$683/monthCan you afford this? If your monthly income is $3,000, that’s 23% of income to vehicle loans
Rule of thumb:
Total vehicle debt payments shouldn’t exceed 15-20% of monthly income
Fees to Expect
Common fees for second lien title loans:
- Lien processing fee: $50-$150
- Origination fee: 1-5% of loan amount
- Late payment fee: $25-$50
- Documentation fee: $25-$75
Total upfront fees:
Typically $100-$300
Benefits of Title Loans on Financed Cars
Access Cash Without Selling Vehicle
You can:
- Keep driving your car
- Continue building equity through auto loan payments
- Access cash tied up in equity without refinancing
- Maintain your current auto loan terms (if using second lien option)
Compare to selling:
Selling requires finding new transportation
Faster Than Refinancing Auto Loan
Title loan approval:
1-4 hours
Auto refinance approval:
No Credit Check Required
Unlike auto refinancing:
- Title loans don’t require credit check
- Bad credit doesn’t disqualify you
- Approval based on equity and income
Good for:
Borrowers whose credit has declined since getting auto loan, title loans with bad credit
Flexible Use of Funds
Auto refinancing only allows you to:
- Pay off existing loan
- Maybe get small cash-out amount
Title loan allows you to:
- Use funds for anything
- Medical bills, home repairs, emergencies
- No restrictions on fund usage
Risks and Considerations
Risk of Losing Your Vehicle
Default scenario:
- If you can’t make payments on title loan
- Lender can repossess your vehicle
- You still owe remaining balance on auto loan
- You lose vehicle AND still have debt
Critical:
Only borrow what you can absolutely afford
Higher Total Interest Paid
You’re paying interest on two loans:
- Auto loan interest (lower rate, larger balance)
- Title loan interest (higher rate, smaller balance)
Long-term cost:
- Higher than having one loan
Alternative:
If you can wait and build more equity, refinancing auto loan for cash-out may be cheaper
Complicated If You Want to Sell
To sell your vehicle:
- Must pay off both loans
- Coordinate with both lenders for lien releases
- More paperwork and coordination
Timeline:
2-4 weeks vs. 1-2 weeks for single lien
May Limit Your Options Later
Second lien on title can:
- Prevent or complicate auto loan refinancing
- Affect trade-in process at dealership
- Require explanation to future lenders
Plan ahead:
Consider your next 1-2 years
Alternatives to Consider
Auto Refinancing for Cash-Out
If you have good credit:
- Refinance auto loan at lower or similar rate
- Get cash from equity
- One monthly payment (may be lower than current)
Pros:
- Lower rate, simpler structure
Cons:
- Requires good credit, takes longer, extends loan term
Personal Loan
If you have decent credit (650+):
- Unsecured personal loan
- Don’t put vehicle at risk
- Rates may be competitive (10%-20% APR)
Pros:
- No collateral risk
Cons:
- Requires better credit, may get lower amount
Home Equity Loan or HELOC
If you own a home:
- Lower interest rates (5%-10%)
- Larger amounts available
- Longer terms (lower payments)
Pros:
- Lower cost
Cons:
Puts home at risk, longer process, closing costs
Borrowing from 401(k) or IRA
If you have retirement savings:
- Low or no interest
- Repaying yourself
Pros:
- Cheapest option
Cons:
Retirement savings at risk, taxes/penalties if not repaid
Use as last resort – retirement funds should be protected
How to Apply for a Title Loan on a Financed Vehicle
Step 1: Calculate Your Equity
Before applying:
- Check vehicle’s current value (KBB, NADA, Edmunds)
- Get payoff quote from auto lender
- Calculate equity: Value – Payoff
- Estimate borrowing power: 50-80% of equity
If you have less than 25% equity:
- Wait and build more equity through regular payments
Step 2: Gather Required Documents
Collect:
- Recent auto loan statement
- Auto lender contact information and account number
- Payment history (screenshots or statements)
- Standard title loan docs (ID, income proof, insurance, registration)
Make copies:
- Keep originals for your records
Step 3: Apply with Title Lender
Application methods:
📞 Phone: (888) 224-8177
💻 Online: 24/7 application
🏢 In-person: Bring vehicle for inspection
Mention upfront:
“I have an existing auto loan and want to use my equity”
Step 4: Vehicle Inspection
Lender will:
- Inspect vehicle condition
- Verify VIN matches documentation
- Assess current market value
- Take photos for file
Timeline:
- 15-30 minutes
Step 5: Lender Verification
Lender contacts your auto lender to:
- Verify payoff balance
- Confirm payment history
- Check for second lien approval
- Verify no other liens
Timeline:
- 1-3 business days (you don’t need to do anything)
Step 6: Approval and Funding
Once approved:
- Review loan terms carefully
- Understand total cost and monthly payment
- Sign loan agreement
- Lender files second lien with Texas DMV
Receive funds:
- Same day to 48 hours
You continue making auto loan payments as usual + new title loan payment
Success Stories
Maria – 2020 Honda CR-V
Situation:
- Vehicle value: $25,000
- Auto loan balance: $15,000
- Equity: $10,000 (40%)
Need:
$4,000 for medical bills
Outcome:
$380 (auto) + $198 (title) = $578 total
Monthly payments:
Approved for $4,500 title loan, second lien position, kept auto loan intact
James – 2018 Ford F-150
Situation:
- Vehicle value: $32,000
- Auto loan balance: $18,000
- Equity: $14,000 (44%)
Need:
$8,000 for business startup
Outcome:
Title lender refinanced entire auto loan + gave $8,000 cash, one payment of $520/month (lower than previous $475 auto + new title loan would have been)
Sarah – 2019 Toyota Camry
Situation:
- Vehicle value: $18,000
- Auto loan balance: $13,500
- Equity: $4,500 (25%)
Need:
$2,000 emergency fund
Outcome:
Approved for $2,200 title loan with flexible lender, second lien, auto loan payments continue
Monthly payments:
$285 (auto) + $110 (title) = $395 total
Check Your Equity and Get Approved Today
Free Equity Assessment
Find out if you qualify:
📞 Call: (888) 224-8177 – Financed vehicle specialists available
💻 Online: Quick equity calculator and application
We’ll tell you:
- Your estimated equity amount
- How much you can borrow
- Whether second lien or refinance is better
- Interest rate and monthly payment
Fast Approval for Qualified Borrowers
Timeline for financed vehicles:
- Application: 10 minutes
- Preliminary approval: 1-4 hours
- Lender verification: 1-3 business days
- Final approval and funding: 24-48 hours after verification
Total time:
Usually 2-5 days from application to cash
Multiple Lender Network
EZ Car Title Loans works with:
- Lenders specializing in second lien loans
- Lenders offering refinancing options
- Flexible lenders with lower equity requirements
One application = multiple options compared
Related Resources
Yes, you can get a title loan on a financed vehicle in Texas with 25-40% equity. Apply today – Call (888) 224-8177 for free equity assessment.