How to Apply for a Vehicle Equity Loan on an Existing Auto Loan at a Credit Union or Bank
Everyone has heard of taking out an equity loan on a mortgage. Mortgage Equity and open lines of credit on your mortgage is a great way to free up low interest cash for projects or emergency funds. If a small loan ($1k – 7k approx.)is needed that can be paid back in a short time, then a secure loan is the best option especially if have good credit.
Applying for mortgage loans can be a lengthy process and refinancing your largest asset results in new long term loans extended to 15 or more years in most cases.
How to Take Out the Equity on a Auto Loan
I personally recommend to anyone who hasn’t visited their local Credit Union to do so. Credit unions are a great place to get locally managed loans with the best interest rates available. Knoxville TVA Employees Credit Union is a favorite of mine in Sevierville, TN. Knoxville TVA has financed several vehicles for me including recently a 2013 Prius V and a 2013 Can Am RTS-SE5. I am still making payments on both of these five year loans. The 2013 Prius V started 12/2012 at $32k with a 2.76 APR and the 2013 Can Am RTS SE5 started 9/2013 at $26k with a 2.45 APR.
Knoxville TVA Credit Union uses the highest of three values to determine a vehicles equity. My Prius V valued one year later at $27,700 and my loan balance was $23K. The balance is lower than normal as I pay over every month. So at the top end of the vehicle’s equity I was able to get a check for $4k without any loan fees etc. Most of the process I did over the phone in an hour, then drove to the local TVA to sign a few papers (20 minutes).
What I Needed to Secure this Equity Loan and My Credit Score
My credit is pretty good, but could be better. One problem I have this year is I’m overextended. I have more credit issued than the cash I bring in. Two high vehicle loans, mortgage, two 5k credit cards, Home Depot credit card, etc. This lowered my credit score to a 670 and I had to provide additional income. My wife was also on the Prius V loan so adding her as a co-applicant was problem and her credit being less impacted than mine was a 730. I was offered a 4.99 APR, not bad but higher than I had. With my wife’s credit score improving since the purchase, it lowered the APR to 1.99 (Bonus!!) I still plan to make additional payments next year and pay down my loan, but my total interest for the 5yr loan went from $2500 to $1400.
Good luck in getting out your equity and hopefully this will help you understand the loan process better and what you need to get the best available loans out there.
Please visit my DIY website @ DIYforanyone.com for more home improvement and money saving tips