The standard title loan is easy enough to understand. You hand over your car title to the lender in exchange for a loan based on your vehicle’ value. When you pay back the loan, the lender gives back the title. Where it gets trickier is with rebuilt title loans. These are title loans on cars that have rebuilt titles. Because these cars are often valued differently than cars with standard titles, the corresponding title loans can also work differently.
Here’s what you need to know about these loans, from what qualifies as a rebuilt title to how this will affect the amount of money you can borrow.
What a Rebuilt Title Is
First, it’s important to understand what a rebuilt title is and how it differs from a salvage title, since many think that they’re essentially the same thing.
When a car suffers damage extensive enough that the insurance company considers it totaled, than the title goes from a regular, clean title to a salvage title. If someone decides to repair the car, the title can go from a salvage title to a rebuilt title.
Of course, it’s not as simple as just repairing the car and declaring it rebuilt. The car will then need to undergo a state inspection, and if it passes, then the state will issue the rebuilt title.
In terms of value, a car with a clean title will always be worth more than the same car with a rebuilt title or a salvage title. A car with a rebuilt title will be worth more than a car with a salvage title because there’s verification that repairs have been made and the car meets state standards.
How Rebuilt Title Loans Affect the Amount You Can Borrow
So, let’s say that you have a car with a rebuilt title, whether you bought it from someone or rebuilt it yourself. You want to apply for a title loan because there’s no credit check and it’s a convenient way to borrow money. One of your title loan questions is how your car’s rebuilt title will affect your title loan.
Most facets of the title loan won’t be affected. Rebuilt title loans work the same way that standard title loans do. The title loan will still need to follow the same state and federal regulations. The term and the payment arrangement won’t work any differently. The interest rate and fees will be the same. The only real difference will be in your title loan earnings, or the amount that the lender is willing to issue you for the loan.
There are several factors that title loan companies take into account when deciding the maximum amount they’ll loan a borrower. These factors include:
• The vehicle’s year
• The vehicle’s make
• The vehicle’s model
• The vehicle’s approximate mileage
• The vehicle’s condition
In many states, title loan companies also need to consider state regulations, because there could be a maximum title loan amount in place. That’s not a concern with title loans Texas, which have no maximum.
The title loan company will follow a simple process to decide how much they can lend you when your car has a clean title. It typically goes as follows:
1. After you complete your loan paperwork, the lender plugs your car’s information, including year, make, model and approximate mileage, into a vehicle value guide. Kelley Blue Book is by far the most popular option.
2. The vehicle value guide will return approximate values for the vehicle depending on its condition. The lender will inspect your vehicle to assess whether it’s in poor, fair, good or excellent condition.
3. The lender will set a current market value for your car, and then set a maximum title loan amount based on this value. With most lenders, the maximum title loan amount will be around 25 to 50 percent of how much your car is worth.
The reason that a lender only loans you up to a portion of your car’s value is to protect themselves if you don’t pay back what you borrow. For defaults on title loans, the lender can legally repossess the car. After that, they can sell it to cover the amount that you owe.
With rebuilt title loans, the lender must take into account that a car with a rebuilt title won’t be worth as much as a car with a clean title. It will be harder to find a buyer, and they won’t make as much money on the sale. Further complicating matters is that vehicle value guides usually don’t include approximate values for cars with salvage or rebuilt titles, which means lenders need to figure out how much less a car with a rebuilt title is worth on their own.
How much you’ll be able to borrow on a rebuilt title loan will depend on your car and the lender. The lender may estimate that a car with a rebuilt title has 50 or 75 percent of the value of the same car with a clean title. You’ll need to take your car in to find out.
Getting a Rebuilt Title Loan
If you have a car with a rebuilt title and you want to get a title loan, you’ll need to go through the same process you would if you had a car with a clean title.
You’ll start by finding a lender in your area or an online lender. Our online application can help with this, as we can connect you with a lender and save you some time. After that, you’ll need to fill out the required title loan paperwork with the lender.
It’s a good idea to let the lender know that your car has a rebuilt title upfront. You don’t want to get to the final stage of the loan process and only let them know about it then, because they may need to go back and make adjustments to the paperwork. If the lender doesn’t offer rebuilt title loans, you also want to know this at the beginning so neither of you wastes your time.
The lender will perform that vehicle inspection and assign a value to your car, then inform you the maximum amount they can issue you as a title loan. If everything is to your satisfaction, you’ll give them your rebuilt car title and they’ll give you the cash for your loan.
With most title loan companies, expect a term of 30 days on your loan. It’s hard to find a long term title loan, especially since title loans are traditionally short term, but you can always roll over your loan if you need more time to pay it off. Rolling over a title loan is another term for extending it.
Having a rebuilt car title won’t preclude you from getting a title loan. You may not have as many lender options and it’s doubtful you’ll be able to borrow as much money, but if you look around, you can still get a fast, convenient loan.