A home equity loan seems to have a lot of similarities with your auto equity loan. You’ll need to repay your loan with interest when you get a loan against the value of your vehicle instead of your property. Auto equity loans tend to be of a similar nature to that of other secured loans.
You shouldn’t let your car be repossessed by the lender in case you aren’t able to repay your loan on time. Once the credit bureaus have your missing payment reports from the lender, your credit score might take a hit. When it comes to addressing your emergency situations, auto loans against your car are a great option.
They tend to relieve you from thinking much about your financial stability. Auto title loans and auto loan refinancing are a few of the other option to borrow against your car.
Options to seek auto equity loans
Auto equity loans are offered by a few credit unions and community banks. The value of your car, your credit history, and your credit score are factors that determine your loan rates. While some of the smaller banks may provide you with car equity loans, the larger banks may not.
You may need to bear an extra payment in the form of your application fees. In addition, you may need to bear an APR worth up to 18% at credit unions.
Instead of a credit union or community bank, you may choose to apply for a car equity loan with a lender. You may achieve secured loans with repayment terms up to 5 years and with APR worth 36% may be achieved with a few notable online lenders. Few of the consumer advocates have shared their opinion on the rates that seem feasible.
Other options to acquire loans against your car
Refinancing of Car Loans
In the event you’re unable to continue with loan repayment or of your interest rate fall, then you may choose to opt for car loan refinancing. Cash-out Refinance loans are offered by a few lenders against your car. It provides you with an opportunity to apply for a fresh loan worth a higher amount than what you’re left with in your initial loan. You’ll be able to save the extra cash when the original loan gets replaced by the new one.
Car Title Loans
Instead of checking your credit, lenders assume the title of your vehicle in the form of collateral while providing quick cash. You may expose yourself to a much higher risk of defaulting when you achieve a loan with a bad credit history. Prior to applying for car title loans, you must check out the rate of interest that you’ll need to bear throughout the period of borrowing. You may need to repay the entire amount within a period of 30 days. A large section of auto title loan borrowers often needs to extend the repayment period by enhancing the repossession risk and in exchange for extra fees. This has already been proved in a report generated by the Consumer Finance Protection Bureau.
Don’t forget auto insurance
You may need to submit your proof of collision and comprehensive coverage with the lender regardless of your choice of auto equity loans. In most states, it’s mandatory to have liability insurance for possessing a car that’s paid off.