Originally posted on https://www.hockyourride.com.au/can-i-get-a-loan-against-my-car/
If you urgently need cash then you might fear that this is going to be very difficult to sort out. After all, figures from the Australian Prudential Regulation Authority suggest a credit crunch, with new loans falling by 0.8% in a year.
One of the reasons given for this drop is the increased level of paperwork needed to get hold of a loan these days. This has left many Australians scratching their heads and wondering how to get the money that they need.
Most people are familiar with the idea of borrowing money to buy a new or used car. Yet, not everyone is aware that doing things the opposite way around could be the perfect solution when they need money fast.
Are you wondering, “Can I get a loan against my car?” The answer in many cases is “yes”. Indeed, you can get a loan against a car a lot more easily than with most other types of loan.
This can be ideal in a number of cases:
• You can’t prove your income
• You have a poor credit history
• You need the money very quickly
If you have a car that is paid off, with no loan on it, then you can borrow against it. With more than 90% of Australians having access to a car in their household, this is an option that is open to many people across the country.
The Value of a Car as an Asset
There are plenty of Australians whose biggest asset is their car. This is typically the case when someone doesn’t yet own a property but has already invested in a vehicle.
It may also be the case that you have a home with a hefty mortgage still running on it, while you have paid off your car loan. In this situation, you can sort out a loan against your car a lot more easily than using your home.
Can I get a loan against my car even if it doesn’t have a high value? Yes, the amount you can borrow is determined by the value of the vehicle but it doesn’t have to a particularly expensive car.
Does My Car Need to be Fully Paid Off?
The main point to remember here is that your car needs to be free of any other loans. The idea is that you can borrow the equity in your car. Just like home equity, this is the amount that the asset is worth less what you owe on it.
Of course, it is possible to take out a home loan even when you have an existing mortgage on it. Typically, the property needs to be worth at least 20% more than you owe on it. This type of loan can be very complicated to arrange and also puts your home at risk, though.
When you borrow against your car, things are so much simpler. This is because it just needs to be free of any existing loans to be used as collateral. You also don’t need to carry out all of the awkward paperwork that comes with home equity loans.
Is There a Risk Involved?
It is worth bearing in mind that doing this puts your vehicle at risk. When you arrange a loan against a car it is used as collateral or security against the money. What this means is that you run the risk of losing your vehicle unless you pay back the money that you borrow.
This is the same as with any other type of secured loan. Whenever you borrow against an asset, the particular asset used as collateral is at risk unless you repay the loan.
Basically, there is no risk involved provided that you pay back the money on time. If you do this then you will seated behind the wheel again in next to no time.
First Steps to Getting a Loan Against a Car
If you have ever taken out a traditional loan in the past then you already know that it can be awkward and time-consuming. How are loans secured against vehicles different in this respect?
The truth is that it is a far smoother process from start to finish. This is something you will notice from the very beginning. As soon you make the decision to free up the equity in your car you are only a couple of steps away from getting the money in your hand.
You need to get in touch with us at Hock Your Ride and you are well on your way. Just ask us, “Can I arrange a loan against my car?” We will advise you how to proceed with a minimum of fuss or delay.
The next step is to visit us. Just take along the vehicle you are using as collateral (this can be any one of an extremely wide range of different types of vehicle). You also need to take your personal ID and documents showing that the vehicle is yours.
Can I Borrow Against My Car More Than Once?
You might wonder whether this is something that you can only do once during your ownership of a particular vehicle. This couldn’t be further from the truth, though.
Once you have paid off the loan, you are back to the same position as before, in that you once again have a car that is free of any sort of security against it. This being the case, you can go through the same simple process and borrow money against it whenever needed.
Is This Your Best Option?
As we have just seen, getting a loan against your car is fast and simple to do. If you need money quickly then this is a smart way to do so without complicating your life.
However, it is down to each person to consider whether this is what suits them right now. It is important that you think carefully about your ability to pay back the money that you borrow on time.
For a lot of Australians, this can be a clever approach that digs them out of a financial hole. Due to the speed and ease of this type of loan, it is something that can be used to very quickly sort out pressing financial issues such as the need to pay back money to someone else very soon.
Overall, this is a popular way of getting some money in your pocket without wasting any time or having to rush around sorting out endless paperwork.