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Equity Auto Loan

One of the best auto loans that a person can get is an equity auto loan. An equity loan is a loan in which equity is used as collateral for an auto loan.

Equity is the difference between the value of a piece of real estate; usually a home, and the amount the property is mortgaged for. If a house is mortgaged for $75,000 but worth $200,000 the home owner’s would have $125,000 worth of equity to borrow against.

Those who own real estate should always consider getting an equity auto loan when they go car shopping because equity auto loans are a much better deal than traditional car loans. Equity auto loans are usually cheaper than traditional car loans.

Advantages to Equity Auto Loans

The biggest advantage to an equity auto loan is that it usually comes with a much lower interest rate than a traditional car loan. Real estate equity loan interest rates are usually much the same as the mortgage rate which is usually between 4% and 10% most car loans with a 15% or higher interest rate. A person can save quite a bit of money with an equity car loan.

Another advantage to an equity auto loan is that it will take several years to pay off unlike a traditional car loan. This means that the equity will still be available in the future when a person needs to buy a replacement car.

Since equity auto loans are based on real estate value a person might get a lot more money for car purchase than with traditional loans. This can help a person buy a new car or a much better car than they would normally be able to get.

A final really big advantage to equity auto loans is that a person can get one before they car shopping. This means that you can walk onto the car lot pre-approved for a loan and know exactly how much you can spend on a vehicle.

Disadvantages to Equity Auto Loans 

There are some serious disadvantages to an equity auto loan, the biggest of which is that equity auto loans increase the amount a person owes on their home or property. This can increase the likelihood of foreclosure and make it harder to pay off the mortgage. It also means that the individual will not be able to borrow as much money against the home.

Another big disadvantage is that taking out too many equity loans can hurt your credit rating. This can make it harder to take out additional loans in the future.

Finding an Equity Auto Loan 

The first place to look for an equity auto loan is the lender that holds the mortgage on your home or other real estate. Simply call the lender or visit the lender’s website and check to see if they offer equity auto loans.
Since you are already approved for a mortgage you should be able to get an equity loan with a lot less paper work. You won’t have to go through a credit check or other steps and could quickly get the loan.

Another good place to search for equity auto loans is online. There are many equity lenders on line and most of them make equity auto loans. Simply typing the words equity auto loan into a search engine should help you locate these lenders.