Can You Have 2 Title Loans at the Same Time?
Can you have multiple title loans? Understand the legal limits and lender practices affecting additional vehicle-secured financing.
A title loan is a type of secured loan where a borrower uses their vehicle’s clear title as collateral. Individuals often seek these loans for quick access to funds. A common question is whether it’s possible to obtain more than one title loan simultaneously.
How Title Loans Function
When obtaining a title loan, the borrower provides the lender with their vehicle’s title, such as a car, truck, or motorcycle. The loan amount is usually a percentage of the vehicle’s wholesale value, often ranging from 25% to 50%. The lender then places a lien on the vehicle’s title, legally establishing their claim to the vehicle if the borrower defaults.
Repayment terms for title loans are typically short, often a single lump-sum payment due within 15 to 30 days. Some lenders offer longer installment schedules over several months. These loans have high annual percentage rates (APRs), often in the triple digits. The vehicle remains in the borrower’s possession and use during the loan term, provided payments are timely.
State Regulations on Multiple Title Loans
The legality of holding multiple title loans, especially on the same vehicle, varies by state. Some states prohibit placing more than one lien on a single vehicle’s title. These regulations protect consumers and prevent over-leveraging a single asset. A state’s motor vehicle department or equivalent agency records liens and dictates what can be recorded on a title.
Other jurisdictions may not explicitly forbid multiple liens but impose restrictions that make obtaining a second loan on the same vehicle impractical. These might include caps on loan amounts, interest rate limitations, or requirements for lenders to verify repayment ability. Borrowers should consult the specific laws and regulations governing title loans in their state of residence, especially if another loan is active.
Lender Practices Regarding Existing Liens
Even where regulations don’t explicitly forbid multiple liens, lenders generally have internal policies preventing a second title loan on an already encumbered vehicle. A primary step in their due diligence is a lien search, typically through the state’s Department of Motor Vehicles (DMV). This verifies if the title is clear. If another lender’s lien is discovered, a new title loan will be denied.
Lenders require a clear title to ensure their security interest in the collateral is primary. If another lien exists, the new lender would hold a subordinate position, giving the first lienholder priority claim in case of default. This secondary position significantly increases risk, making them unwilling to issue the loan. Obtaining multiple title loans on different vehicles is generally possible, provided each vehicle has a clear title and meets the lender’s criteria.