These days, unless you have good to perfect credit, you may be struggling to obtain the crucial payments on things everyone needs at some point in life. Buying a car, a home, even securing a personal loan can be a much easier process if you have decent credit, verifiable income, a deposit, a cosigner, or something to utilize as collateral on your loan. This is where having a car can greatly increase your chances of getting the things you want or need.
The trick to using your current vehicle as collateral for anything, is to verify the equity value you have in the car. You also need to be the owner of the car or have the owner be willing to sign the title over to you in order to claim it as your personal possession that can be used for a future loan in your name. How to check the equity in your car or truck is fairly simple; you can appraise it online on any of the free calculators such as Kelley Blue Book, Edmunds, or NADA to name a few. You enter in your specific car’s data into the website such as the make, model, mileage, and year of the vehicle. It will also ask that you depict the current condition of the car; this is where you need to be completely honest. By trying to upsell the value of your car when it isn’t in stellar condition, you will end up with an inflated estimate. The issue with this is, once you go to the lending institution in which you wish to obtain your new loan, you will presume your car is worth more than they will allot you collateral value for. If you have any doubts about the condition of your car, ask a friend or family member, or you can go through this checklist to better categorize your car properly.
You can still use a car that you are paying off on payments as collateral for a loan as well. It’s the same process by determining the worth of the car, by factoring in what you owe on it. In order to use this type of car scenario as collateral, you must owe less than what it is worth to qualify for a loan using it. You’ll need all of the car’s documentation to provide as verification for the potential new loan you are aiming to obtain. Understand fully that in the event you fall through on your new loan payments, that at any time your car that you put down as collateral on the loan can be repossessed and you will seriously damage your credit.