Ways to Borrow Against your Car
We often come across situations when we are short of money and we need it the most at that time. In such cases, there are short term personal loans offered by lenders to tide you over. Or if it is a larger amount you need you will need to offer collateral, in return for the lent amount. Collateral can be an asset of value like a house, jewelry, land or even a car. However, to borrow against a home or a car you would need equity in it – positive equity. That is, the value of the car must be more than the outstanding loan amount.
The loan on a car generally can get you the money faster than a case where the collateral is a home. One can borrow against their car in the following ways:
Auto Equity Loan
This is similar to a home equity loan, but the value of the car is used instead of a house. You use the vehicle to get a loan and then pay it back with interest. Like any other secured loan, there is a risk. In case of non-repayment of the loan, the lender can repossess the vehicle. Auto equity loans are purely for emergency situations when you need fast cash.
Auto Loan refinancing is a good option when the interest rates fall or if you find a loan worth better terms. Lenders also offer cash-out refinance loans with the car as collateral, which allow you to take a loan of a higher amount than what is left on your outstanding loan. The new loan replaces the original loan and any extra amount can be retained by you.
Auto Title Loan
Lenders provide cash in return for holding the title of the car. Car title cash loans are usually given without checking your credit. You can get a loan even if you have bad credit and you have a higher risk of defaulting. But this is why the lender will hold the title to your car. Like payday loans car title loans have a high-interest rate and are usually due within a short time period. For example, the loan can be due within 30 days.
You may choose any type of loan, but lenders require proof of comprehensive insurance as well as collision insurance. If the car is paid off, then you may choose to keep only liability insurance. In such a case a lender may offer you the option to purchase credit insurance which covers you in certain cases. The loan repayments will be covered through credit insurance if your car is damaged, you lose your job or are injured. But credit insurance doesn’t cover the cost of repair for a damaged car.
If you are looking for loans that will take your car as collateral, then a simple search for cash for title near me visit site will generate the required results.