Can I Take Out a Loan Against My Car?
It is possible to take a loan against your car through a specific type of secured loan option known as a car equity loan or car title loan. If you are searching for an unsecured personal loan but are unable to secure new credit due to your credit history, taking out a loan against your vehicle can be an option.
Secured loans like auto equity loans and car title loans can typically cater to individuals who may not have prime credit but need emergency cash to make ends meet. A car title loan can allow you to borrow money against the value of your vehicle and secure fast funding! 1 5
Keep reading to learn more about car title loans and how to take out a loan against your vehicle. Max CashⓇ is here to help you understand the ins and outs of title loans!2
How to Get a Loan Against My Car
Getting a loan against your car may seem like a complicated process if it’s a new concept for you. Just like borrowing against the value of your home through a home equity loan, a vehicle-secured loan is a chance to tap into your vehicle’s positive equity when you’re in a financial bind.
One of the main reasons why taking out a loan against your vehicle is more flexible than an unsecured loan is the fact that you must use your car as collateral for the loan. By pledging your car title as collateral for the loan, you’ll be able to secure funding. Of course, you must meet the lender’s initial criteria and be able to provide certain documents to verify your income and other pertinent information.5
Collateral makes the loan secure, but you are assuming more risk through a secured loan as a borrower. Therefore, the inquiry process can be more flexible through car title loans, even if you do not have a strong credit history.5
Driving your vehicle when you are paying off your vehicle-secured loan is possible, but understand that you are expected to be responsible. That means paying off your loan on time each month to avoid vehicle repossession. Since a vehicle repossession reported to the major credit bureaus can stay on your report for up to 7 years, it is important to prioritize paying off your title loan.
What Do I Need to Use My Car as Collateral for a Loan?
Although there are exceptions in some cases, you will typically need to own your car outright in order to apply for a title loan.5 Besides having a qualifying vehicle title in your name, you will need to have a few documents on hand to get through the title loan process:5
- Recent Pay Stubs or Another Document to Prove Your Income
- Proof of Residence and Car Insurance Are Typically Requested
- Valid, Government-Issued Identification Card, Like a Driver’s License
- Pictures of the Vehicle (Including All Four Sides, Odometer Reading, and VIN)
The initial inquiry process for a loan against a car that is paid off typically involves providing information about the car, including information like the make, model, style, and current mileage. Title lenders assess the vehicle’s value through a physical or virtual vehicle inspection to determine how much an individual can obtain through a loan against the car title. Other factors, such as the individual’s income and current state of residence, will also determine their eligibility and overall loan amount.1 5
What are the Pros and Cons of Getting a Loan Against My Car?
Like many loan options, there are pros and cons associated with getting a loan against your vehicle title. Take a closer look at some of the factors that stand out the most:
- Pro: Using a car as collateral for a loan can make it easier for individuals with poor credit to secure new credit, typically without relying on a co-signer. Since the loan is secured by the value of the vehicle and not solely a credit history, lenders may be more willing to extend credit to subprime individuals.5
- Pro: Car title loans and auto equity loans are designed to be streamlined. In some cases, eligible borrowers can receive funds in as little as one business day, making it a quick solution for urgent financial needs.1 5
- Con: Since this is a secured loan option, if the borrower fails to repay the loan as agreed upon based on the terms of their loan contract, the lender has the right to seize the vehicle. The lender or loan servicer may be willing to discuss alternatives to this scenario if you are proactive and reach out before you default on your loan, however.
How Much Can I Get By Borrowing Against My Car?
The amount of money that you can obtain through a loan against a car title will depend on a few different factors, including the amount of positive equity in your vehicle.1 Positive equity in a car occurs when its market value exceeds the amount that the individual owes on the vehicle in question. A combination of items affects the market value of a vehicle, such as the make and model of the car, its age, mileage, condition, and popularity based on consumer purchasing habits.
The percentage of the car’s value that a lender is willing to loan to a qualified borrower can vary, but lenders could potentially offer loans that range from 25% to 50% of the car’s total value.1 5
Exploring Other Borrowing Options
Discussing different borrowing options with Max CashⓇ service representatives can potentially provide valuable insights into finding the most suitable borrowing solution for your individual circumstances.5 As a borrower who is dedicated to making informed financial decisions, it is essential to compare interest rates, repayment terms, and associated fees when evaluating different borrowing methods.3 4 5
Conclusion About Taking a Loan Against Your Car
Car title loans can be financial tools that can help during times of financial hardship. Understanding the loan terms, considering loan options, and being aware of potential consequences are critical steps in making an informed decision.4 5
Learn more about how to take out a loan against your car today! Max CashⓇ is here to help. Call 833-207-9052 today to discuss inquiring about a loan against your car title.5
