Apply for the loan: Aside from the normal details like your income and credit score, lenders will want to know the details of your car so they can establish its value.Your best bet is to check with local credit unions and your current auto loan lender (if you still have a loan).
Find a lender: Auto equity loans aren’t that common, especially at big banks.To calculate your auto equity, subtract the remaining amount on your car loan from your car’s value (as determined by Kelley Blue Book or a similar resource). Make sure you have equity: If you don’t have any equity in your car, you won’t be eligible to get a car equity loan.While lenders may set their own rules for the application process, here are rough guidelines you can follow: Getting an auto equity loan is a bit different than applying for a personal loan. You’re certain you can afford the loan so you don’t risk repossession of your car.You’re finding it hard to qualify for other traditional loans.You have a good amount of equity built up in your car.You’re looking for lower interest rates.On Consumers Credit Union's Website When Is an Auto Equity Loan the Right Choice?Īn auto equity loan can be a good option if: Some will let you borrow your full equity (such as the $15,000 in the previous example) while some offer loans up to 125% of your equity, which would work out to $18,750 in this case ($15,000 x 125%) However, each lender sets its own rules for the maximum amount you can borrow. If you still owe money on your loan, however, your equity would be equal to the car’s current value minus your loan balance.įor example, if the car is worth $20,000 and you owe $5,000 on it, you have $15,000 worth of equity ($20,000 – $5,000). If you’ve paid off your car loan and you owe it free and clear, your equity would be equal to the car’s current market value. When you take out an auto equity loan, your lender will offer you a loan based on the equity you have in your car. We’ll walk you through how auto equity loans work to help you decide if this type of personal loan is right for you. If you have equity in your car and need to borrow money, this could be an option worth pursuing.
Your equity is the difference between your auto loan’s balance and how much your car is currently worth.
While auto equity loans aren’t very common, they allow you to borrow against the equity you have in your car.
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