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 as well as publishing original and objective content, by enabling users to conduct studies and compare data for free - so that you can 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 deals that are advertised on this site are from companies who pay us. This compensation could affect how and where products appear on this site, including, for example, the order in which they be listed within the categories of listing, except where prohibited by law for our mortgage, home equity and other products for home loans. This compensation, however, does have no impact on the information we provide, or the reviews you see on this site. We do not consider the vast array of companies or financial deals that could be open to you. Xavier Lorenzo/Getty Images
3 min read Published November 15, 2022
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Written by Bankrate Written by This article was generated by using automated technology. It was then thoroughly verified and edited by an editor on 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 beginning of 2021. They are dedicated to helping readers gain the confidence to take control of their finances. They provide precise, well-studied and well-researched data that breaks down otherwise complex topics into manageable bites. Review by Mark Kantrowtiz by Nationally recognized expert on student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA and scholarships, 529 plans, education tax benefits along with student loans. The Bankrate promises
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If you're looking to get an auto equity loan make sure to contact your credit union or bank first. They might offer the service, or they may have a partner that they're able to connect you with.
Auto equity loan compares to. car title loan A car title loan is an instant loan that relies on your vehicle as collateral. Most of the time the cars title loans are more costly than auto equity loans. Comparatively the auto equity loans generally have longer terms and low interest. Benefits associated with Auto equity loan An auto equity loan may come with numerous benefits. Quicker approvals. For those who have bad credit, an auto equity loan can result in quick approval. Since you can use the equity in your car for collateral purposes, the lender can be sure that it is getting its cash back. Higher loans. Similar to any equity loan, the amount you can take out is largely determined by the amount of equity you have in your vehicle. Someone with a $10,000 car and $5,000 in equity could get up to a $5,000 loan as an example however, someone with a less valuable car might not be able get an loan at all. The interest rates are low. The interest rate you pay for the automobile equity loan is directly linked to your credit score as well as what you can expect to get for your vehicle. That means if your car is worth a lot it is possible to obtain a great rate even if you have less than perfect credit. The drawbacks of any automobile equity loan There are also negatives to getting the auto equity loan. The vehicle is the collateral. A car equity loan uses your car as collateral. If you don't pay your loan the lender may take possession of your car to recoup the losses. The loan is hard to come by. Auto equity loans aren't popular. If you're looking to obtain an auto equity loan consider contacting your bank or credit union first. They may be able to provide the service, or they may have a partner to get you connected with. What kind of car equity loan is suitable for? A car equity loan may be right for you if you meet the following requirements: You own an equity in your vehicle. The most important aspect to being a qualified applicant to get car equity loan is having enough equity available to take the loan against. You are able to afford the installments. Because your car is at risk so it's crucial to ensure that you'll be able to afford payments every month. If you fail to do so, your vehicle could be taken back. This is a particular issue if you require the car on a daily basis. Rates of interest could be less than what you currently pay. If the rates of interest of an automobile equity loan are less than traditional personal loans or various credit alternatives, it could make sense to opt for this unusual loan kind rather than something that is that's more accessible. Alternatives to an auto equity loan If you're unable to obtain the auto equity loan or If the application process isn't as smooth as you'd like, then you might want to look into loan alternatives that don't need your car. Home equity Similar to the auto equity loan, a relies on you having equity in your home. In general, you can get a loan up to a portion of the equity you own or a predetermined cap. When you are the owner of your own home, this may be an option. Personal loan Personal loans are a viable alternative choice to an auto equity loan However, the rates could be a little higher as they aren't secured. The procedure for getting a personal loan is the same as that of applying for one for an auto loan and is able to be completed online or in person with various lenders. Credit cards are an alternative, are usually significantly more costly than the personal loan or secured loan. They are, however, also easier to qualify for and you could have instant access to the credit upon approval. The next steps A car equity loan could be a good idea if you're looking for an loan at a low rate. However, it is important to plan your budget in advance, since your vehicle will be in danger if you cannot pay the loan. Find out more
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Written by This article was created using automated technology and was thoroughly checked for accuracy and quality by an editor from our editorial staff. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain confidence to take control of their finances through providing clear, well-researched details that cut complicated subjects into bite-sized pieces.
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Review by Mark Kantrowtiz by Nationally recognized student financial aid expert Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans.
Nationally acknowledged expert in student financial aid
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