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 better financial choices by offering financial calculators and interactive tools that provide original and impartial content. We also allow users to conduct research and compare information for free - so that you can make sound 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 Earn Money The products that are featured on this site are from companies who pay us. This compensation can affect the way and when products are listed on the site, such as for instance, the order in which they may appear in the listing categories, except where prohibited by law for our mortgage or home equity products, as well as other home lending products. But this compensation does not influence the information we publish, or the reviews that you read on this site. We do not consider the entire universe of businesses or financial offers that may be accessible to you. Xavier Lorenzo/Getty Images
3 minutes read. Published November 15, 2022
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Written by Bankrate Bankrate. This article was written with the help of automation technology, and then edited and fact-checked by an editor from our editorial team. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to control their finances by providing precise, well-studied and well-researched data that breaks down otherwise complex topics into manageable bites. Reviewed by Mark Kantrowtiz Reviewed by Nationally well-known expert on student financial aid Mark Kantrowitz is an expert on student financial aid as well as the FAFSA, 529 plans, scholarships tax benefits for education and student loans. The Bankrate promises
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If you're interested in getting an auto equity loan first, contact your credit union or bank first. They may be able to provide the loan, or might have a partner they can connect you with.
Auto equity loan is different from. car title loan A car title loan is an instant loan which uses your car as collateral. In most cases it is the case that auto title loans are much more expensive than auto equity loans. Contrary to this, auto equity loans often come with longer terms and low interest. Advantages from the auto equity loan An auto equity loan comes with a number of benefits. Quicker approvals. For those with bad credit, an auto equity loan can mean quick approval. Since you can utilize the equity of your car to secure the loan, the bank will be able to ensure it gets its cash back. More substantial loans. As with any equity loan the amount you can take out is partially determined by the amount of equity you have in your vehicle. A car worth $10,000 and $5,000 in equity can get a $5,000 loan for instance however, someone who has a less desirable car may not be able to obtain an loan at all. The interest rates are low. The rate you get on an auto equity loan is directly connected to your credit score and the value of your car. That means if your car is valued at a high value it is possible to secure a favorable rate even if you have less than perfect credit. Drawbacks to any auto equity loan There are also some drawbacks to taking out an auto equity loan. Vehicle is collateral. An auto equity loan utilizes your vehicle as collateral. In the event that you do not make payments the lender may take possession of your car to recover its loss. Hard to find. Auto equity loans aren't very popular. If you're looking to obtain the auto equity loan make sure to contact your bank or credit union first. They might offer this service, or they may have a partner that they could connect you with. Which auto equity loan is suitable for? A car equity loan could be the right choice for you if you fulfill the following requirements: You own an equity in your vehicle. The most important aspect to being a suitable candidate of car equity loan is having enough equity to take an loan against. It is possible to pay the monthly payments. Since your car will be at risk so it's crucial to ensure that you will be able to afford payments each month. If you do not then your car could be taken away. This could be a issue if you use the vehicle on a regular basis. Rates of interest could be lower than what you currently pay. If the interest rates for an auto equity loan are lower than conventional personal loans or different credit choices, it could be a good idea to choose this uncommon loan type than something more readily available. Alternatives to car equity loan If you can't get an auto equity loan or if the application process isn't going as smoothly as you'd like, you may want to think about loan alternatives that don't require your vehicle. Home equity Much like an auto equity loan it is based on you having equity in your home. It is typical to be able to take out loans up to a certain percentage of the equity or a set amount. In the event that you have your own house, this may be a viable alternative. Personal loan Personal loans are a solid alternative choice to an auto equity loan however, the interest rates are likely to be a little higher as they aren't secured. The process for taking out a personal loan is similar to that of applying for the auto loan and can be made in person or online with a variety of lenders. Credit cards, while they're an alternative, are usually far more costly than a personal loan and secured loan. However, they are additionally easier to qualify for and provide immediate access to the credit upon acceptance. The next steps A car equity loan is a great option if you're in seeking an loan with a low interest cost. However, it is important to budget accordingly, as your car will be at risk if can't make payments. Find out more
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The article was written by produced using automated technology, and thoroughly edited and fact-checked by an editor from our editorial team. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain confidence to take control of their finances with clear, well-researched details that cut otherwise complicated topics into digestible pieces.
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Reviewed by Mark K. Kantrowitz Reviewed by Nationally acknowledged expert in student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA, scholarships, 529 plans as well as tax benefits for education as well as student loans.
Nationally acknowledged expert in student financial aid
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