Are You a Good Candidate for a Car Equity Loan?

When you are thinking of getting a car equity loan, then the first thing that comes to mind is whether you are a good candidate for a car equity loan or not. If that’s what you are wondering, then it’s time to get the answer.

You are a Good Candidate for a Car Equity Loan when:

You need Immediate Cash

The fact is that when you go with a traditional loan, you are unable to get immediate cash because there is a lot of paperwork involved. Your task is to furnish all the required documents, submit them, and then wait for the loan approval, which takes over a week in most cases. On the other hand, when you take a car equity loan from an online lender or a community bank, you can get quick approval and cash in hand. So, when you are in an emergency and want to get fast money, you should go and get it.

You Want to Get Rid of a High-Interest Debt

Are you paying back a high-interest debt like a student loan or a credit card? If that’s the case, you may find relief by applying for a car equity loan. A credit card is an unsecured loan that becomes quite expensive due to its high-interest rate. You can pay it off quickly with another loan, aka borrowing against your car equity. As car equity is a secured loan, so you can get a better rate on it as you are using your car as collateral, you can negotiate a good deal with the lender.

You are Unable to Get A Loan from A Bank

Whenever people think of a loan, they approach banks. Although banks offer a good deal, yet many people don’t get approval on time. You can skip the hassle of banking from this situation by going with a car equity loan option. Tapping on your car equity lets you get quick debt from either a community bank or an online loan provider.

You Have a Bad Credit

People with bad credit always face problems in a loan approval. However, many online lenders are facilitating them with instant approval of car equity loans. A lender circumvents his loan risk by holding a car title as a collateral for the loan. In case a borrower doesn’t pay back and then a lender handles his default risk by repossessing the car and informing the credit bureau about non-payment. However, if you want to improve your credit, it is quite possible to get a car equity loan with bad credit and later pay back the loan payment on time. Once you pay off all your loan amount within three months, you can see improvement in your credit score.

You are Looking for Better Terms

People can take a loan against their car titles, and such loans are known as car title loans. However, since a borrower needs to pay them back within three to six months, these are short-term loans. Contrary to this, car equity loans bring better terms. You can pay back the loan within three to five years. Your lender will charge a fixed interest rate on this loan. It’s easier to pay back the loan in monthly installments for a longer-term than for a short term.