Are you in a tough financial situation that requires you to quickly come up with some money? If so, you're likely looking at all your options for how you can get it. One possible way is to leverage the value of your car to receive a loan that can help with your money problems. There are a few options for the type of loan you can get.
Auto Equity Vs. Auto Title Loans
While you may hear the terms for auto title and auto equity loans being thrown around, you should know that they are two different kinds of loans you can pick from if you own your vehicle.
An auto equity loan is essentially a type of personal loan, but you secure it using your vehicle's value as the collateral. It's possible to use an auto equity loan that lasts a long time, with a similar length of an actual auto loan. Since these loans are secured, you won't need to have great credit to use them. However, it helps to have previously worked with the lender to increase the potential of having the loan approved.
An auto title loan is a bit different since it is used by many private lenders and works similar to using a pawn shop. You provide the title of the vehicle and receive a portion of the vehicle's current value as a loan. After a set period of time, you'll have the option to pay the loan off completely, extend the loan period and pay additional interest, or surrender the title to your vehicle if you are unable to make payments.
Equity loans will have a lower risk then title loans since you typically have a longer period to pay them off. Meanwhile, there are very few credit requirements if you have to get a title loan, making it a better possibility for those that have bad credit. A title loan might work for you if you know you can pay the loan back immediately in order to minimize interest payments.
Equity and title loans are only possible if you own the car outright. If you have an existing loan and the car is not fully paid off, you'll need to look into refinancing. You'll be starting the entire loan process over again on your car with a new interest rate, but you'll get the money back that you have paid towards the principal of the car. Keep in mind that you need to apply for the loan again, and you may not qualify if you now have bad credit.
Talk to a company near you to learn more about car title loans and other types of refinancing options.