Qualifying for a loan takes time. There are boxes to tick, fences to jump and a whole other host of metaphors to think of. This process takes even longer if your creditor sees you as a risk. For those who can’t prove a concrete and assured ability to pay back the loan, you may also end up with an application rejection. After that, it’s plan B, which may not even exist.
Don’t fret; other options are available, one of which is opting for car equity release. This allows you to borrow up to a certain amount of money based on the value of your vehicle. Before embarking on this avenue, it’s best to be fully educated on its implications. With that in mind, here is our IDEAL guide to using your car to get a loan.
If the very thought of red tape and bureaucracy has you cowering in the corner, then you’ll be pleased to hear that a car equity arrangement doesn’t require the completion of endless documents. You also don’t have to wait for a long time to receive the money. Make of that what you will. For some, a lack of documentation and a haste to complete the job spells trouble; indicative of a rushed process and murky legality. For others, it’s a convenient option if cash is required quickly.
For those who fall into the latter camp, good news; as soon as you can prove ownership of the vehicle, you can get the loan right away. Even if you haven’t finished paying off your car’s original loan yet, you can still borrow money using your physical, actual car. The amount, of course, depends on how much of the existing car loan you have already paid off. For instance, if you’ve already paid off around 40% of the total value of your car, you can borrow an amount around that computed value.
REASONABLE INTEREST RATES
Like other loans, you have to expect to pay interest on top of the principal amount; that’s the capitalist system at work and unless there’s a revolution, you’re going to have to dance to their tune. Sigh. The rates for car equity don’t tend to be too expensive, fortunately. That said, it’s sensible to ask your chosen creditor first for a detailed breakdown of repayment costs and frequency before entering into an application process.
DIRE CONSEQUENCES SHOULD YOU FALL BEHIND
Though your car won’t get taken from you immediately if you fail to repay your loan on time (there’s a grace period and several warnings before that final act occurs), this dire end game is something to be aware of. Sure, you’ll receive notifications if yours is at risk and you may be given time to amend the situation, but associated fines will be added to the repayment schedule.
And if you still can’t pay the loan on time, your car is at risk of getting taken away and into the possession of the creditor. So, should you envisage future financial problems, it’s probably not sensible to pursue this course of action. At the very least, you ought to work out a detailed budget in order to calculate whether or not you can afford the repayments.
CHECK THE RELIABILITY OF THE PROVIDER IN ADVANCE
If you’re not planning on borrowing a huge amount and you’re certain you have enough time to repay the loan, only then should you continue with the process. Just like a logbook loan, the transaction can be completed swiftly, though you should first do your due diligence and check the reliability of the loan provider first. Online reviews on websites such as Trustpilot will help you make an informed decision.