Can you refinance a title loan?

Quick Answer Yes, you can refinance a title loan. Refinancing involves paying off your existing title loan with a new loan. It can help you lower your interest rate, extend your repayment period, or both. However, you'll end up paying more in total finance charges.

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Samuel Fisher ā€¢ Answer updated on Jun 14, 2023

Fact checked by Dwayne Dumesle

Yes, it's totally possible to refinance a finance loan.

The process will function very similar to an auto loan refinance. A title lender will pay off your old title loan and issue you a new loan with the cost of the old loan backed into the balance of the new loan.[1]

Learn: Who buys out title loans?

Although, there are some things you should consider. The benefits don't need much introduction. You receive more time to repay the loan and may get to lower your interest rate.

However (sorry for the drama), the downside of refinancing is a little bit more sneaky and under the radar. Before refinancing your title loan, here are the extra finance charges that you will need to account for:

  • Total interest: Even if you receive a better interest rate, if you extend the loan's term, you will likely be paying more in total finance charges. If the new deal makes sense to you because you really need a lower payment, we won't judge you. But, be aware, you are going to be paying more in the long run.
  • Fees, fees, fees: Despite the extra benefit that comes along with refinancing, additional lender fees may be tacked on after refinancing your title loan. These may be application fees or registration fees. Either way, these are items that will mean more cost to you.
  • Repossession: Merely refinancing your title loan does not guarantee that you have escaped the risk of repossession. If you find yourself needing to refinance, it indicates you are facing financial straits. So, it is crucial to ensure that your new interest rate is significantly better. Let's make sure you keep that whip in the garage! šŸš™

You should exercise extreme caution before refinancing your title loan. Refinancing often means you will be paying more in interest and you'll be paying the debt off for longer ā€” all of which means more money from out of your wallet!

Learn: What is the interest rate on title loans?

If you are thinking about refinancing, make sure to add up all the costs. Don't get tricked by the reduced monthly payment amount.

You may be better off gutting out your original payment schedule rather than adding additional payments to your title loan with a refi. Remember: the goal is to eventually stop paying your title loan!

  1. How Does Car Refinancing Work? ā†©ļøŽ

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