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 aim is to assist you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content. We also allow users to conduct research and compare data for free to help you make sound financial decisions. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The products that are featured on this website are provided by companies who pay us. This compensation can affect the way and when products are listed on this website, for example for instance, the order in which they appear in the listing categories, except where prohibited by law for our mortgage or home equity products, as well as other home lending products. This compensation, however, does have no impact on the content we publish or the reviews that appear on this website. We do not consider the universe of companies or financial deals that could be available to you. Xavier Lorenzo/Getty Images
3 minutes read. Published 15 November 2022
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Written by Bankrate Bankrate. This article was written with the help of automation technology, and then checked and edited by an editor on our editorial team. Written 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 the confidence to manage their finances through providing precise, well-studied and well-researched data that breaks down complex subjects into bite-sized pieces. Reviewed by Mark Kantrowtiz Reviewed by Nationally recognized expert in student financial aid Mark Kantrowitz is an expert on student financial aid, the FAFSA as well as 529 plans, scholarships, education tax benefits and student loans. The Bankrate promises
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who ensure everything we publish is objective, accurate and reliable. Our loans reporters and editors focus on the points consumers care about the most — the different kinds of loans available as well as the best rates, the most reliable lenders, the best ways to repay debt, and many more — so you’ll be able to feel secure when investing your money. Editorial integrity
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There are money-related questions. Bankrate has answers. Our experts have been helping you manage your finances for more than four years. We strive to continuously provide our readers with the professional advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors and reporters produce honest and reliable content to help you make the best financial decisions. Our content produced by our editorial staff is objective, factual and is not influenced through our sponsors. We’re open about the ways we’re in a position to provide quality information, competitive rates and useful tools for our customers by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products or services, or when you click on certain hyperlinks on our site. Therefore, this compensation may affect the way, location and when products are listed in the event that they are not permitted by law. We also offer mortgage or home equity products, as well as other home loan products. Other factors, such as our own rules for our website and whether the product is available within your area or at your personal credit score can also impact the manner in which products are featured on this website. While we strive to provide a wide range offers, Bankrate does not include specific information on every financial or credit product or service. A allows you to borrow money with no securityfor instance, by taking out the auto equity loan you can take out money against the value of your car. Although having a car can mean a lower interest rate, you will need to think about the advantages and the risks associated with an auto equity loan before taking one out. What exactly is an automobile equity loan is An car equity loan is a variation of an . The funds can be used for any purpose, provided there is equity in your vehicle. Auto equity loans permit you to get money against the worth of your car. If your car is worth 25.000 dollars and there is a loan balance of $10,000, then you’ve got $15,000 worth of equity that you can potentially take out a loan against. If you take out an auto equity loan you are able to borrow as much as 100 percent equity you have in your vehicle, subject to a specific limit. Because this loan will be secured with your vehicle, it’s likely you will be able to obtain a lower rate than the typical personal loan. But, since your vehicle is used as collateral, it’s susceptible to repossession should you not pay your loan on time. Bankrate tip
If you’re looking to get the auto equity loan make sure to contact your credit union or bank first. They might offer the service, or they might have a partner they are able to connect you to.
Auto equity loan is different from. car title loan A car title loan is an instant loan which uses your car as collateral. Most of the time the auto title loans are much more expensive as compared to auto equity loans. In comparison to auto equity loans, auto equity loans generally have longer terms and lower interest rates. Advantages of the auto equity loan An auto equity loan may come with a number of benefits. More rapid 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 you have in your vehicle as collateral, the lender can ensure that it’s getting its funds back. Larger loans. As with any equity loan, the amount you can borrow is partially dependent on the amount of equity you have in your vehicle. Someone with a $10,000 car and equity of $5,000 can get $5,000 loan for instance, while someone who has a less desirable car might not be able obtain a loan in the first place. Low interest rates. The you receive on your car equity loan is directly connected with your score on credit as well as what you can expect to get for your car. If your car is valued at a high value and you have a good credit score, you could be able to obtain a great rate even with less than perfect credit. There are some disadvantages to taking out the auto equity loan There are also some disadvantages of taking out the auto equity loan. The vehicle is the collateral. An auto equity loan uses your car as collateral. If you do not make payments, the lender may take possession of your car in order to recover the loss. The loan is hard to come by. Auto equity loans aren’t very popular. If you are looking to obtain the auto equity loan, check with your credit union or bank first. They may be able to provide the service, or have a partner they can get you connected with. Which auto equity loan is suitable for? A car equity loan might be the best option for you if you fulfill the following criteria: You have equity in your car. The most important part of being a good applicant for the auto equity loan is having enough equity to take a loan out against. You are able to afford the to make payments. Because your car is on the line and you’ll need to be aware that you’ll be able to afford payments every month. If you don’t, your vehicle could be repossessed. This is a particular issue if you use the car on a daily basis. Interest rates may be lower than what you’re currently paying. If the interest rates of an automobile equity loan are lower than conventional personal loans and other credit options, it might be beneficial to consider this unusual loan instead of something more readily available. Alternatives to auto 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 might want to look into loan alternatives that don’t need your car. Home equity Like an auto equity loan it is based on you having equity in your home. Typically, you can get a loan up to a portion of the equity or a set amount. If you own your house it could be a viable alternative. Loans for personal use loan Personal loans can be a great alternative to an auto equity loan however, the interest rates could be a bit higher since they’re not secured. The process for taking out an individual loan is the same as that of applying for the auto loan and is able to be completed in person or online using a variety of lenders. Credit cards, while they’re an option, they’re usually significantly more costly than a personal loan or secured loan. They are, however, more affordable to get and you could have instant access to credit after acceptance. The next steps A car equity loan could be a good idea if you’re seeking an loan with a low interest cost. However, it is important to plan your budget appropriately, because your car could be in danger if you can’t make payments. Learn more
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This article was written by generated using automation technology and was thoroughly checked for accuracy and quality by an editor on our editorial team. The article was 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 control their finances by providing clear, well-researched details that cut complex topics into manageable bites.
Auto loans editor
Reviewed by Mark Kantrowtiz Reviewed by Nationally recognized expert in student financial aid Mark Kantrowitz is an expert on student financial aid including the FAFSA as well as scholarships, 529 plans, education tax benefits and student loans.
Nationally recognized student financial aid expert
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