Auto equity loans: What they are and who they’re best for Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive tools and financial calculators, publishing original and objective content. This allows users to conduct research and compare data for free to help you make informed financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The products that are featured on this site come from companies that pay us. This compensation may impact how and where products appear on this site, including for instance, the order in which they appear in the listing categories and other categories, unless prohibited by law. Our mortgage or home equity products, as well as other home lending products. But this compensation does affect the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial deals that could be available to you. Xavier Lorenzo/Getty Images
3 minutes read. Published November 15, 2022
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Written by Bankrate Written by Bankrate. This article was written with the help of automation technology, and then edited and fact-checked by an editor from our editorial staff. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the beginning of 2021. They are passionate about helping readers gain the confidence to control their finances through providing precise, well-studied and well-researched data that breaks down complex subjects into bite-sized pieces. Written by Mark Kantrowtiz and reviewed by Nationally recognized expert on student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA as well as 529 plans, scholarships, education tax benefits along with student loans. The Bankrate guarantee
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If you’re interested in getting an auto equity loan make sure to contact your credit union or bank first. They may be able to provide the service, or they may have a partner that they’re able to connect you with.
Auto equity loan vs. auto title loan A car title loan is an instant loan that uses your vehicle as collateral. In most cases the car title loans are much more expensive as compared to auto equity loans. Comparatively the auto equity loans often have longer terms and low interest. The advantages from Auto equity loan A car equity loan can come with a number of benefits. Faster approvals. For those who have bad credit, an auto equity loan could mean an approval in a short time. Since you can utilize the equity of your car for collateral purposes, the lender will be able to ensure it gets its money back. Larger loans. Similar to any equity loan the amount you are able to borrow is partially dependent on the amount of equity you own in your car. Someone with a $10,000 car and equity of $5,000 could be eligible for $5,000 loan as an example, while someone with a car that is less valuable might not be able to get a loan in the first place. Low interest rates. The rate you get on an automobile equity loan is directly related to your credit score as well as what you can expect to get for your vehicle. That means if your car is valued high it is possible to get a good rate even with less than perfect credit. There are some disadvantages to taking out the automobile equity loan There are also disadvantages of taking out an auto equity loan. Your vehicle is the collateral. An auto equity loan makes use of your vehicle as collateral. In the event that you do not make payments in full, the lender can repossess your vehicle in order to recover its loss. It is difficult to locate. Auto equity loans aren’t very popular. If you’re planning for the auto equity loan consider contacting your bank or credit union first. They might offer this service, or have a partner that they could connect you with. Which auto equity loan is ideal for? A cash-back loan might be the best option for you if you meet the following: You have equity in your car. The most important aspect to being a good candidate to get car equity loan is having enough equity available to take an loan out against. It is possible to pay the monthly installments. Since your car will be on the line and you’ll need to be aware that you will be able to afford payments every month. If you do not make payments, your vehicle may be taken away. This could be a problem if you need the vehicle on a regular basis. Rates of interest could be less than what you’re currently getting. If the rates of interest of an automobile equity loan are lower than conventional personal loans and different credit choices, it could be a good idea to choose this uncommon loan kind rather than something that is that is more easily accessible. Alternatives to an car equity loan If you can’t get the auto equity loan or if the application process isn’t going as smoothly you’d like, you may want to consider loan alternatives that don’t require the use of your vehicle. Home equity Much like the auto equity loan one of the main reasons for this is the equity you have in your house. Typically, you can take out loans up to a certain percentage of the equity or a set amount. In the event that you have your own house it could be a viable alternative. Loans for personal use loan Personal loans are a viable alternative to an auto equity loan However, the rates could be a little higher as they aren’t secured. The process of taking out a personal loan is the same as that of obtaining an auto loan and is able to be completed in person or via the internet with various lenders. Credit cards, while they’re an alternative, are usually significantly more costly than an individual loan or secured loan. However, they are more affordable to get and provide immediate access to the credit once you have approval. The next steps A car equity loan is a great idea if you are in looking for an loan with a low interest cost. It is essential to plan your budget in advance, since your car could be in danger if you can’t make payments. Find out more
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Written by This article was produced using automated technology, and was thoroughly checked for accuracy and quality by an editor from our editorial staff. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to control their finances through providing clear, well-researched details that cut otherwise complicated topics into digestible pieces.
Auto loans editor
Review by Mark Kantrowtiz by Nationally known student financial aid expert Mark Kantrowitz is an expert on student financial aid including the FAFSA and scholarships, 529 plans, education tax benefits along with student loans.
Nationally recognized student financial aid expert
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