Auto Equity Loans Edmonton: Using Your Car as Security for Financing Quick Cash
If you own a vehicle and are in need of some fast cash, there are several loan options available to you by using your car as collateral. With a car equity loan, you are able to borrow against your car’s equity value and use the car as security. Unlike other types of car loans,
you do not have to have excellent credit either. To learn more about how a car equity loan works, what requirements you need, and what the benefits and negatives are, read below.
Here is How a Car Equity Loan Works in Canada
A car equity loan works in a similar fashion to home equity loans but instead of using your home as the collateral damage item, the loan lender uses your vehicle. This type of loan allows you to borrow cash based on the amount of equity that you own in your car. This is the market value of the vehicle less any obligations that you owe directly to the car. What this means is that you do not have to own your car outright entirely as you can still borrow against it while making payments on the principal amount. The only thing to keep in mind is the maximum amount of cash you will receive is solely based on how much equity you’ve built up. In plain terms, the market value of the car minus how much is still left owing = how much equity you have.
What Are The Pros & Cons Associated with Car Equity Loans?
The positives include the following
· Compared to other types of auto loans for individuals with bad credit, car equity loans in Edmonton will have a longer payment term. This will help make your loan payments more affordable for you but will cost you extra due to interest accrued. This is great for individuals who do not have a lot of money on hand all at once and are able to budget the payment into their regular bills.
· You do not need to own the car outright. You are able to qualify for a car equity loan even if you are still making payments. This is a huge benefit to those who still have months left on their payment contract.
· For most car loan types, you will need to have excellent credit. This is not an easy piece of criteria to meet for everyone, but with a car equity loans in Edmonton, you do not have to worry about a credit score at all.
The negatives include the following
· Car equity loans in Edmonton can be costly as they are not the cheapest way to finance fast cash. Why? Their interest rates are often higher because the lender takes on more risk. However, they are more affordable than other loans like car title loans and payday loans.
· As with any car type of car loan, failure to pay or defaulting on the loan will cost you the car. The lender can repossess it and sell it to recoup the loan amount.
To Get Car Equity Loans in Edmonton, What Do I Need?
In order to qualify for car equity loans in Edmonton, you will need to provide three pieces of criteria. The first is proof of income to show the lender that you can repay the loan. This only requires you to show the last few paystubs from your employment. The second piece of documentation you will need is proof that you own comprehensive and collision insurance for the duration of the loan’s term. The third and final piece of documentation is that the car must be registered to your name, otherwise, you cannot borrow against it.
A car equity loan does not require you to have an excellent credit score nor does the lender need to see your credit score or see a credit report. This is because the lender is loaning you out money based on the car’s equity, not based on your credit score. The lender can simply repossess the car if you default and sell it.
What is the Main Difference Between a Car Equity Loan & a Title Loan?
A Car equity loan could be provided on a vehicle which is not fully paid off while car title loan basic requirement would be to have the vehicle free and clear.