How Do I Get a Loan Against My Car that is Paid Off?
Getting approved for a car loan can often be a tricky process, and you may be wondering how to get your next loan - whether it’s for a personal loan or business use.
If you’re lucky enough to have a car that is paid off, you should view it as a valuable asset. A fully paid off car can be used as collateral for another loan. Sometimes, it may even be the case that you can take a loan against your car when it’s not fully paid off – although you’ll still need to have enough equity in it and owe less than its value.
Is my car my most valuable asset?
It’s common for Australians in their late twenties and early thirties to be renting, and do not yet own a property. Sound familiar?
If this is your current situation, it means your most valuable asset may be your car. When it comes to taking out a loan, consider the value of your car, whether you own it outright, or if not, what percentage of the loan is already paid off.
Can I take out a loan against my car that is paid off?
Yes, you can use a car as collateral for another loan. Similar to a home equity loan, an auto equity loan will use the value of your car instead of your home to get a loan – and you’ll then need to pay this back with the agreed rates of interest.
Remember that there are risks involved in using your car as collateral, and it’s generally a good idea to use this option in emergency situations only.
You could also consider some of the other options such as auto loan refinancing, or auto title loans, both of which Positive Lending Solutions can help with. Don't hesitate to give us a call on 1300 722 210 if you want to have a no-obligation chat about what we can do for you.
How do I begin getting a loan against my car?
We have decades of experience helping people with a wide range of finance needs, so we want to help make it as positive and stress-free as possible.
It’s really helpful to know your credit score or credit rating when taking a loan against a car. This is free and easy to find out, and it will help you know where you might stand with lenders. It’s also helpful to get an up to date valuation of your car.
It’s also important to remember that some lenders may require proof of comprehensive and collision insurance. This may be at a higher level than what you currently have if your car is fully paid off, so bear this in mind when factoring in costs.
Risks of taking out a loan against a car
As with any secured loan, you should be aware that getting a loan against your car means that you do risk having it repossessed if you default on your loan.
The car will be viewed by the lender as security for the loan so if there are any issues with your repayments, you could risk losing your car.
You can avoid this by always making your repayments on time and ensuring that you have budgeted carefully, considering all of your monthly expenses.
The right choice for you
Using your car as collateral does have risks, so it’s really important that you speak to an expert before signing any agreements.
At Positive Lending Solutions, we have decades of experience working with people searching for the right car loan. Our experience in the industry means that we have access to a wide range of lenders and can direct you to the company with the best options for you.
We can help you understand your options so you can decide if taking out a loan against a car is the right decision for you.
Find out how we can help you get a loan against a car now.
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Tom Caesar is the Managing Director of The Positive Group, a group of Australian financial services companies offering a broad range of finance to clients Australia wide. The Positive Group assist clients in the areas of car finance, mortgages, insurance & wealth management. Tom has been in car & asset finance for over 10 years. Tom regularly contributes articles on car finance, insurance, technology and business growth, drawing on his experience of starting his own brokerage in 2009.