What does it mean to refinance a title loan?

A refinance, also known as a rollover, is a term that's generally used to describe an extension to a payment schedule. For example, let's say you take out car title loans in Austin but find that you don't have the means of paying them off on time. Instead of having your collateral forfeited, you could opt to communicate with the lending company and request more time to pay it off. The company will create an extension period — usually 30 days — provided you meet their requirements to do so.

The alternatives to refinancing title loans is either:

  • coming up the money to relieve the remainder of your debt
  • relinquishing the vehicle annotated on the title that was furnished to the lender

When the first option is impossible and the second isn't acceptable, you'll need to request a rollover to get a leg-up on your payment window. This is a perfectly acceptable and common situation for many clients, since financial complications are the very reason they needed a title loan in the first place. We can't expect every client to solve this within a month, and many of them do need more time to get a handle on paying it off.

Under what conditions can a refinance be allowed or denied?

The conditions for refinancing title loans are far from stringent, requiring only two inputs from you:

  • A minimum payment of the loan's full interest for the original loan term
  • A heads-up from you, so we know that you intend to refinance

That's it. Unpaid loan principal — in other words, the amount borrowed — will be rolled over to the extended payment window under a modified, often slightly higher interest rate. Since Texas state law stipulates that title-based lending companies can't assess interest rates in excess of 10%, the rates remain manageable even after committing to a rollover plan.

The only time that a refinance may be denied is if you fail to pay off the interest for the term that you're attempting to extend. Despite this, our loan specialists have the final say, and communication is essential. If you've failed to make it on the interest payments for some reason but provide evidence that all debts will be relieved inside the following period, we can work with you to make an exception.

What are the contraindications?

The important detail to pay attention to is that you've borrowed money from someone else's pocket — that pocket being ours. At some point after lending the money, we need to earn it back somehow, which is the point of securing the loan with your auto title. As such, the pressure to pay off the loan will increase over time, and this is expressed in the form of rising interest rates with repeat rollovers.

There are a few points to take note of:

  1. Interest rates in excess of 10% constitutes a felony known as usury. You can count on your interest never exceeding this figure for any reason, under any circumstances ever.
  2. Title-based lending companies are much more partial to refinancing title loans than to the unfortunate alternative of seizing the vehicle that's listed on the title. Repossession forges poor customer relations and is rarely lucrative for the lender.

The takeaway from all of this is simple: You'll pay slightly more from one payment term into the next, but we're more than happy to help you do so — it beats the other options, and that's as much for your benefit as ours.

Can a lender refinance a loan from another lender?

Some lenders can actually commit to a buyout on a title loan that was created by another company. Typically, clients will find themselves requiring a buyout when they've chosen to do business with an unethical lending company, in which case the new lender will help the client escape from the predatory lender by taking over the loan plan and reforming it down to a more palatable rate. Like with traditional rollovers, this will come at its own price, but we won't lock you into a cycle of debt like the other company did.

Bear in mind that buyout plans are contingent upon many of the same factors that decide your eligibility when acquiring or refinancing title loans. This means that we'll consider the following:

  • Your income status
  • The fair market listing for your vehicle
  • Whether or not you're collecting government benefits

As with most title-based lenders, we don't need to check on your credit history when deciding upon your ability to pay off a rollover or buyout plan. When rolling over a loan from another company, the title will need to be transferred to us, as will all debts to the previous lender. From that point on, we assume control over what remains of the balance and how you'll pay it off.

So what does it all boil down to?

Basically, this is what you need to know about refinancing title loans:

  • You should ensure that the interest is fully paid for the current term before committing to a new one
  • You must communicate your intent to refinance — we can't do this automatically
  • Your interest rate will increase slightly
  • We can refinance from other title-based lenders