How Auto Equity Loans Work And What's Required

Have you recently been turned down for a loan because of your poor credit? An auto equity loan from California Title Loans is a great option not only to borrow a significant amount but also to ensure that your credit score won't be much of a factor when determining how much you can borrow. Auto equity loans use a vehicle as collateral, such as a car, motorcycle, semi truck, or SUV. You can keep driving your vehicle for the duration of the loan, and your lender places a lien on the vehicle's title.

Auto equity loans in California typically range from $2,500 to $20,000, with qualified borrowers receiving loans of 40% to 60% of the vehicle's current resale value. Not all equity lenders are the same, and you should expect different requirements and payment terms for most types of vehicles. For example, a car valued at $10,000 may result in a $5,000 loan at California's maximum capped rate of 36% plus the federal funds rate. On the other hand, a vehicle valued at $6,000 can get you at least $2,500, but you'll still need to bring the vehicle in for inspection.

The requirements for an auto equity loan are similar to those for title loans in CA, and anyone who applies with a paid-off vehicle has a good chance of qualifying. The car's title must be in your name, and there can't be any lienholders on it. Additional requirements include a valid government-issued ID and proof of income to demonstrate your ability to afford the monthly payments. Prove your income with bank statements or a letter from your employer. While income verification and a paid-off vehicle are the main requirements for a title loan in California, you may also need registration documents and proof of insurance coverage on the vehicle.

Some lenders require an in-person inspection of your vehicle to confirm that it can be used as collateral for an equity loan. These inspections can be completed quickly and often in less than an hour. During the inspection, your lender will review the vehicle's inspection report and confirm that it meets the valuation requirements.

 

A car with considerable equity driving on the freeway.

 

Auto Equity Loans With Bad Credit - How To Get Approved

Bad credit can be a significant issue for anyone who needs fast cash to pay for a financial crisis. Your lending options are severely limited when you have poor credit, and most personal loan lenders will deny your application if you have a bad FICO score. Auto equity lenders, on the other hand, aren't focused on your credit history; instead, they look at your vehicle's value and ability to repay the loan when underwriting your loan terms.

California Title Loans offers pre-approval for auto equity loans to customers with a lien-free vehicle, and your credit score is not a primary factor in the underwriting process. Lenders want to know that there's a vehicle they can fall back on if you default on the payments, and that's far more important to them than your FICO score. Call California Title Loans at 855-339-1001 today to get started on your application to borrow against the equity in your car or truck.

 

Benefits Of Online Vehicle Equity Loans

Equity Loans Are Convenient - Borrowers applying for equity loans often need emergency cash quickly, and that's where California Title Loans can help you. All you need to qualify is a paid-off vehicle and proof of income. Underwriting for an equity loan is minimal because we know there's equity in your car, which serves as collateral for a title loan.

No Extensive Credit Check - Unlike unsecured loans, which often require multiple credit checks, most vehicle equity loans have minimal credit requirements. Your credit score is far down the list of requirements for an equity loan, and you should have no trouble getting approved, even with a few loan defaults or missed payments on your credit cards.

Keep Your Car - Auto equity loans let you keep your car and keep the keys. You don't need to give up daily use of your vehicle; instead, you guarantee your loan with the vehicle's title.

Payoff Your Loan Early - California title loan lending laws prohibit prepayment penalties for auto equity loans between $2,500 and $9,999, meaning you can pay off your loan early and reduce total interest costs.

 

Drawbacks Of Vehicle Equity Loans

High Interest Rates (APR)—A drawback of a vehicle equity loan is the high interest rates, which make it difficult to pay off early. The APR for any secured loan between $2,500 and $9,999 in California is capped at 36% plus the federal funds rate under AB 539, with a minimum repayment term of 12 months. Loans of $10,000 or more have no interest rate cap, meaning licensed lenders in CA can charge much higher rates.

Repossession—You risk having your vehicle taken and sold at auction if you fall behind on payments. If your vehicle is ever repossessed, you'll still have time to get it back, but you'll still owe late and repossession fees. Stay updated on the repossession laws in California, and contact your lender if you can't make the minimum payments.

 

Understand Vehicle Repossession Risk With An Auto Equity Loan

Using your vehicle as collateral for an auto equity loan is a great way to borrow cash, but there's always a risk of repossession. Here's what you need to know in California:

  • Repossession is possible after you miss a payment.
  • California law states that a lender is not required to inform you if it plans to repossess your vehicle.
  • After your vehicle is repossessed, you must be notified about the seizure within 48 hours. Additionally, your auto equity lender must notify you within at least 60 days of the repossession, and they must provide at least 15 days' notice of their intention to sell the vehicle.

 

The Bottom Line About Auto Equity Loans

If you're looking for a fast and convenient way to borrow money without focusing on your credit history, consider an online equity loan in California. Apply online or call us at California Title Loans at 855-339-1001 to get a jumpstart on your title loan application. Loan amounts for an auto equity loan in California start at $2,500, and qualified customers with a lien-free vehicle and proof of income may be able to borrow 40% to 60% of the vehicle's resale value. Apply today.