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Why You Can’t Obtain Title Loans With Liens

Why You Can't Obtain Title Loans With Liens

Car title loans have been a valuable financial tool on the market for some time now, especially for those who may have less-than-perfect credit. Unfortunately, many people are still unfamiliar with title loans and exactly how they work. This can lead to confusion and lost time as people try to obtain title loans with liens still on their vehicles or otherwise attempt to get loans without completely understanding the ins and outs of the title loan process and in what situations car title loans are a good solution. Since one of the many benefits of car title loans is that they are so quick and easy to obtain, understanding the process can really help people out.

For the car title loan process, all that is required is usually a vehicle with a lien-free title and a photo ID. This is because the value of the vehicle is used as collateral in the loan. If the loan isn’t repaid, the lender keeps the title and can claim the vehicle in lieu of payment. That’s why the borrower has to be the owner of the vehicle, and it’s also why the vehicle’s title has to be lien-free.

What is a lien? A lien is a claim that a lender has over a vehicle. If a car, truck, or SUV was financed through a bank or other lending company when it was purchased, that bank or lending company is essentially a part-owner in the vehicle until all the car payments have been made and the financing is fully paid off. Some people jokingly refer to this as “renting from the bank.” Until that financial obligation is fulfilled and the car, truck, or SUV belongs completely to the borrower, the vehicle’s title is considered to have a lien on it from the bank or other financial institution, meaning that the borrower is not the sole owner of the vehicle. This makes it impossible to get title loans from most lenders.

This all may sound a bit complicated, but it’s really fairly simple. In order to obtain a car title loan, a borrower needs to be the sole owner of the vehicle that they’re using as collateral. This means that the borrower’s name must be the same one that appears on the title. In the case of title loans with liens, the bank or other financial institution would be a “part owner” of the car, which is why most lenders don’t issue title loans with liens on the vehicle.

However, if you have a lien-free vehicle, car title loans can be a great way to get quick cash in Kansas City, Overland Park, St. Joseph, or anywhere else in the metro area, even if you have bad credit. Just bring in your photo ID and your car’s lien-free title to Midwest Title Loans in Kansas City, or get started now by filling out our Online Title Loan Information Sheet, and let us help you get the cash you need with a lien-free car title loan today!


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