Owning a vehicle provides you with the legal right to use, control, and even sell or dispose of the asset. This right, known as ownership, also includes auto equity loans. Auto equity is the difference between your vehicle’s market value and any loans you still owe on it.
Car equity is important when looking for ways to get funds. This is especially true for car title loans and similar financing options. In this article, we will look at how car equity can be a useful asset. We will also discuss how you can use it with secured loans, like auto equity loans.
Curious About Your Car’s Value?
Knowing your car’s exact value is important. This is especially true if you plan to borrow money using your vehicle as collateral. Understanding your car’s equity helps you make smart choices about car title loans.
These loans are a common way to handle unexpected money needs. Understanding how much equity you have in your vehicle is critical when applying for an auto equity loan.
How Do I Use the Equity in My Vehicle for a Loan?
If you need quick funds, auto equity loans (often called car title loans) may be a helpful solution. Many people use these secured loans in emergencies. This often happens when they have a high medical bill or other unexpected costs.
These loans let you borrow money using the value of your car. You can keep your vehicle while doing this.
Several factors influence your car’s market value, including the make, model, year, mileage, and overall condition. These factors are used to determine the market value when selling a car, whether privately or to a dealer. However, borrowing against your vehicle’s equity is a little different. Auto equity loans don’t offer the full value of your car, but rather a percentage of the equity you’ve built up.
For example, if the market value of your car is $25,000 and you still owe $20,000, your equity stands at $5,000. In this case, you could potentially take out a loan based on that $5,000 in equity. If your vehicle is fully paid off, you own it completely. In this case, the full market value of $25,000 can be used for the loan.
How Title Loans Work
A car title loan allows you to access funds based on the equity in your vehicle. This form of financing is classified as a secured loan because your vehicle’s title serves as collateral. The good news is that, in most cases, you can continue driving your car while making your loan payments.
Unlike other types of loans where you give up physical items, car title loans let you keep your vehicle. You can keep your car while you pay back the loan.
For instance, at Capital Title, you can maintain full use of your vehicle while repaying the loan. There’s no need to hand over a set of keys or surrender your car as you would with a traditional pawn. Instead, Capital Title places a lien on your car’s title as security for the loan. Once the loan is fully repaid, the lien is removed, and you regain full ownership, free and clear.
Benefits of Car Title Loans
One major advantage of using car equity for a secured loan is that the process often does not impact your credit score. Car title loans usually depend on the value of your vehicle and its equity.
They do not focus on your credit history. Some borrowers may even qualify for special promotions, such as a 30-day interest-free loan. These offers provide flexibility, as long as you repay the loan in full within the designated 30-day period.
Another benefit is that you don’t necessarily need to own your vehicle outright to qualify. Even if your vehicle has a lien on it, you may still be able to borrow against the remaining equity. This is useful for individuals who are still making monthly payments on their car but need access to funds quickly.
The Application Process
Applying for a car title loan is straightforward and can be done online or in person. Here’s what you typically need to complete the application process:
- Check your vehicle: A quick inspection can help you understand its current condition and market value. This will help establish the loan amount you can borrow based on your auto equity.
- You need a clear title for your vehicle: Alternatively, you can provide proof that an electronic title is registered in your name with the DMV. If your vehicle is not paid off, you must show documentation that proves your ownership and the amount you still owe.
- Proof of Residence: You may need utility bills, bank statements, or other documents to show your current address.
- Valid ID: A government-issued ID, such as a driver’s license, will be necessary for identity verification.
- Proof of Income (Optional): You do not always need to show proof of income. However, if you can show that you earn $1,000 or more each month, it may help you get a higher borrowing limit.
Once these requirements are met, the application process is usually quick. Most borrowers get their loan amounts on the same day.
Repayment and Other Terms
Car title loans are usually short-term loans. They need to be paid back within 30 days. However, many lenders allow you to extend this time.
If you cannot pay back the loan by the due date, you might extend it for 30 more days. You just need to make the minimum payment.
The loan contract will include all the necessary details, such as the loan amount, interest rate, and repayment terms. To prevent vehicle repossession due to loan default, adherence to the loan agreement is paramount. Once you repay the loan, you remove the lien and regain full control of your car’s title.
Why Consider a Car Title Loan?
If you need quick approval for amounts ranging from $500 to $5,000 or more, a car title loan can provide a solution. You can keep using your vehicle while paying back the loan. This gives you a flexible way to manage emergency expenses without losing your transportation.
Car title loans have a simple application process. They provide quick access to funds. This makes them a good choice for people facing money problems. You can apply online or visit one of Capital Title’s two Tallahassee locations for personalized assistance.
In conclusion, car equity is a valuable asset that you can leverage in times of financial need. By learning about auto equity loans and car title loans, you can make smart choices. This way, you can borrow against your vehicle’s value while still keeping ownership and control.
You can quickly check if you qualify for title pawn without leaving home by applying online at Capital Title, before visiting one of two locations near Tallahassee, FL. You can also call our West Location at 850-219-2274, or our East Location at 850-297-2274 if you have any questions.