If you lease a car, you know you have restrictions with what you can do with it. For instance, because you’ve leased it, you can’t sell it. You must give the car back to the dealership after the lease term runs out.

title loans and leased cars, The Rules You Should Know Regarding Title Loans and Leased Cars, Days of a Domestic Dad

Sometimes, you can also buy it when the lease ends if you like the car and decide to keep it.

You might want to know if you can get a title loan for a leased car, though. We’ll talk about that in the following article. There are rules that go along with that concept, and you should know about them if you’re pursuing this option.

What is a Title Loan?

Before we get into whether you can use a leased car as collateral, let’s make sure you know about title loans. A title loan means you approach a lending entity like Gordon Simmons service credit union or bank. There, you ask a lending agent whether you can use your vehicle as collateral to get a short-term, high-interest loan. If you own the car and have its title, then you can often do this.

Title loans work well if you don’t have the best credit score or sometimes if you don’t have a steady job. You can try getting a title loan with a good credit score and a reliable job, but most people don’t do that.

Most individuals who get title loans do so because lending entities might not let them take out an unsecured loan. You’re a better candidate for an unsecured loan with a combination of a reliable job and at least a decent credit score.

Like any secured loan where you use something valuable as collateral, if you use your car, you can potentially lose it if you can’t repay that loan on time. That’s because the lending entity puts a lien on it. 

That lien means they can legally repossess your vehicle if you can’t pay back the loan on time.

Remember that title loans usually only give you a few weeks to pay back that loan, at the most. They’re short-term loans with higher interest rates than you’ll typically see with unsecured loans.

Now, let’s talk about title loans and leased vehicles.

Can You Use a Leased Vehicle if You Want a Title Loan?

Usually, when you get a title loan, you must own the car. You have the title that goes with it, which is the physical document indicating you own the vehicle. This document has all the vehicle’s information, such as the VIN.

Because you must own the car if you want a title loan, you can’t use a leased vehicle to get a title loan. If you approach a lender, like a credit union or bank, and they ask about the car, you must tell them that you’ve leased it. If you try getting money with a leased car and concealing the vehicle’s ownership status, the lender and the entity that leased you the car will soon find out.

The lending entity will not give you the money you wanted, and they probably won’t like that you wasted their time. You can claim ignorance, but they still won’t give you that cash as long as the car you have retains its leased status.

How Can You Move Forward?

Usually, when facing this situation, you would try getting money another way. You may look for a better-paying job, or you may ask your boss whether you can get a raise.

You can always consider getting a second job. You might look into various side hustles to raise the money. You can also attend some college classes if you want a degree. At that point, you will have a more impressive resume.

If you want the money the loan would give you very quickly, though, you might think about whether you have anything else worth cash that you can use as collateral. Maybe you own a home. If so, you can pursue a home equity loan. You might also use some collectibles, antiques, jewelry, or anything else a lending entity might accept.

What About if You Only Have the Car?

If you feel like you need money fast for some reason, and you only have the car and nothing else particularly valuable, you can move forward, but only if you get rid of that leased vehicle status. In other words, you must own the car outright to get that title loan.

This means you must approach the entity that leased you the car. Presumably, that’s a dealership. You can tell them that you want the car, and you’ll willingly end the lease to get it.

There’s a potential problem, though. The entity that leased you the car probably has you locked into a contract. To buy the vehicle, you must pay a certain amount, and you likely don’t have enough money. If you had that much cash, you probably wouldn’t need the title loan in the first place.

That’s why, if you need money urgently and you have a leased car, it generally doesn’t make a lot of sense to try buying the vehicle from the leasing entity. It’s almost always more prudent if you can raise the money that you need another way.

Buying out the lease only becomes possible if you can raise the cash, but you sometimes have one additional option. Sometimes, you can find a title loan lender who will buy out your lease. That way, you’ll instantly own the car, and you can get the money you need through a title loan as soon as you officially become the vehicle’s owner.

Some people do this, but most of them look at other options if they need money urgently. You might only find a lending entity that will buy out your lease and give you a title loan if you know you’re getting a significant cash windfall soon. That way, you’ll know you can pay back that loan quickly.  

title loans and leased cars, The Rules You Should Know Regarding Title Loans and Leased Cars, Days of a Domestic Dad