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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 goal is to help you make better financial choices by offering interactive tools and financial calculators that provide original and impartial content. This allows users to conduct studies and evaluate information for no cost and help you make financial decisions with confidence. Bankrate has agreements with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that pay us. This compensation could affect how and where products appear on this website, for example for instance, the sequence in which they appear within the listing categories in the event that they are not permitted by law for our mortgage, home equity and other home lending products. This compensation, however, does not influence the content we publish or the reviews appear on this website. We do not consider the universe of companies or financial offerings that might be accessible to you. Xavier Lorenzo/Getty Images
3 minutes read. Published November 15, 2022
Expert verified. How is this page expert verified?
At Bankrate, we ensure the accuracy of our content seriously. "Expert verified" signifies that our Financial Review Board thoroughly evaluated the content to ensure accuracy and clarity. The Review Board comprises a panel of financial experts whose mission is to make sure that our content is always neutral and fair. The reviews of the Review Board ensure that we are publishing quality and reliable content.
Written by Bankrate Written by The article was created with the help of automation technology, and then edited and fact-checked 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 late 2021. They are dedicated to helping readers gain the confidence to control their finances by providing clear, well-researched information that breaks down complex topics into manageable bites. Written by Mark Kantrowtiz and reviewed by Nationally well-known expert in student financial aid Mark Kantrowitz is an expert on student financial aid as well as the FAFSA, 529 plans, scholarships educational tax benefits, as well as student loans. The Bankrate guarantee
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At Bankrate we are committed to helping you make better financial decisions. We adhere to the highest standards of editorial integrity ,
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In 1976, Bankrate was founded. Bankrate has a long record of helping people make wise financial decisions.
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who ensure everything we publish ensures that everything we publish is accurate, objective and reliable. Our loans journalists and editors concentrate on the things that consumers care about the most -- the various types of loans available and the most competitive rates, the top lenders, ways to pay off debt and more -- so you'll be able to feel secure when making a decision about your investment. Integrity of the editing
Bankrate has a strict policy standard of conduct, which means you can be confident that we're putting your interests first. Our award-winning editors and journalists produce honest and reliable content to assist you in making the right financial decisions. Our main principles are that we respect your confidence. Our goal is to provide our readers with accurate and unbiased information, and we have editorial standards in place to ensure this happens. Our editors and reporters thoroughly check the accuracy of editorial content to ensure the information you're reading is correct. We keep a barrier between advertisers as well as our editorial staff. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence Bankrate's editorial staff writes in the name of YOU the reader. Our goal is to provide you the best advice that will help you make smart personal finance decisions. We adhere to strict guidelines to ensure that our editorial content is not in any way influenced by advertising. Our editorial team receives no directly from advertisers, and our content is thoroughly checked for accuracy to ensure its truthfulness. So whether you're reading an article or a report you can be sure that you're getting reliable and reliable information. How we earn money
If you have questions about money. Bankrate has answers. Our experts have been helping you master your money for more than four years. We are constantly striving to provide consumers with the expert guidance and the tools necessary to be successful throughout their financial journey. Bankrate follows a strict , so you can trust that our content is truthful and accurate. Our award-winning editors, reporters and editors provide honest and trustworthy content that will help you make the right financial decisions. Our content produced by our editorial staff is objective, truthful and is not influenced from our advertising. We're transparent regarding how we're able to bring quality content, competitive rates and useful tools for you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products andservices or by you clicking on certain hyperlinks on our website. This compensation could impact how, where and in what order items appear within listing categories in the event that they are not permitted by law for our mortgage, home equity and other home lending products. Other elements, such as our own proprietary website rules and whether or not a product is available in your area or at your self-selected credit score range could also affect the way and place products are listed on this site. Although we try to offer a wide range offers, Bankrate does not include specific information on every credit or financial item or product. A allows you to borrow money without any security -for instance, through Auto equity loan, you can borrow money against the value of your vehicle. Although having a car can result in a lower interest rate however, you must be aware of the benefits and potential dangers associated from the auto equity loan prior to taking one. What is an auto equity loan is an car equity loan is a variant of a . You can make use of the money for any purpose, provided there's equity in your vehicle. Auto equity loans let you take out loans against the value of your vehicle. If your car's worth 25.000 dollars and there is a loan balance of $10,000, you have the equivalent of $15,000 of equity you could borrow against. If you take out the help of an auto equity loan it is possible to take as much as 100 percent equity in your vehicle, subject to a specific limit. Because the loan is secured by your car and your car, you're likely to be able to get an interest rate lower than the typical personal loan. However, because your car is being used as collateral, it could be at risk of repossession in the event that you fail to make your payments on time. Bankrate tip
If you're interested in getting an auto equity loan first, contact your bank or credit union first. They may offer the loan, or might have a partner they can connect you with.
Auto equity loan vs. the car title loan A car title loan is an instant loan that relies on your vehicle as collateral. In most cases it is the case that cars title loans are much more costly in comparison to car equity loans. Comparatively the auto equity loans often are longer-term and have low interest. Benefits from Auto equity loan A car equity loan can come with a number of benefits. More rapid approvals. For those who have bad credit, an auto equity loan can result in quick approval. Since you can utilize the equity you have in your vehicle to secure the loan, the bank can ensure that it's getting its funds back. More substantial loans. Similar to any equity loan the amount you can borrow is partially determined by the amount of equity you own in your car. A car worth $10,000 and $5,000 in equity could get up to a $5,000 loan as an example, while someone with a less valuable car might not be able to obtain a loan in the first place. Low interest rates. The you receive on your auto equity loan is directly linked with your score on credit as well as the value of your car. This means that if your vehicle is valued high it is possible to get a good rate even if you have less than perfect credit. The drawbacks of the automobile equity loan There are a few disadvantages of taking out an auto equity loan. The vehicle is the collateral. An auto equity loan makes use of your vehicle as collateral. If you don't pay your loan in full, the lender can repossess your vehicle to recover its loss. Hard to find. Auto equity loans aren't very often available. If you're planning for an auto equity loan consider contacting your credit union or bank first. They might offer this service, or have a partner they can connect you with. Which Auto Equity loan is best for An auto equity loan might be the best option for you if you meet the following requirements: You own equity in your car. The most important part of being a good applicant for the auto equity loan is having enough equity to take the loan out against. You can afford installments. Since your car will be on the line, it's important to know that you'll be able to pay each month. If you do not, your vehicle could be taken back. This can especially be a problem if you need the car on a daily basis. Rates of interest could be lower than the rates you're currently getting. If the interest rates of an automobile equity loan are lower than traditional personal loans or various credit alternatives, it may be beneficial to consider this unusual loan kind rather than something that is more readily available. Alternatives to an auto equity loan If you aren't able to get an auto equity loan or when the process of applying isn't going as smoothly you would like, you may want to think about loan alternatives that don't require your vehicle. Home equity Similar to the auto equity loan it is based on you having equity in your home. It is typical to be able to get a loan up to a portion of the equity you have or a predetermined cap. In the event that you have your own home, this may 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 higher because they aren't secured. The process for taking out the personal loan is similar to the process of applying for one for an auto loan and can be done in person or via the internet with a variety of lenders. Credit cards are an option, they are typically much more expensive than the personal loan and secured loan. However, they are also easier to qualify for and provide immediate access to the credit once you have acceptance. The next steps A car equity loan could be a good idea if you are in looking for an loan at a lower rate. However, it is important to plan your budget in advance, since your vehicle will be at risk if you can't make payments. Learn more
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Written by This article was produced using automated technology, and thoroughly edited and fact-checked by an editor on our editorial team. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to control their finances by providing clear, well-researched details that cut complicated subjects into bite-sized pieces.
Auto loans editor
Review by Mark Kantrowtiz by Nationally acknowledged student financial aid expert Mark Kantrowitz is an expert on student financial aid and the FAFSA as well as scholarships, 529 plans educational tax benefits, along with student loans.
Nationally acknowledged expert in student financial aid
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