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Can You Take Out a Loan Against Your Car?
Would I be able to take a loan out against my car? I need to take out a loan, but my credit isn’t great. From what I know, I’ll get a better rate if I have collateral. Can I use my car for that?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Yes, you can take out a loan against your car as long as you have positive equity on it. However, using your car as collateral for a personal loan puts you at risk of repossession, so it’s important to weigh the pros and cons of this choice before moving forward. To learn more about your options when using your car as collateral, talk to your lender.
If you don’t have enough equity on your car, though, you won’t be able to use it for a loan. You could see if the lender will accept other types of collateral like a savings account or your home. However, keep in mind that using these things as collateral for a loan puts you at risk of losing them if you can’t make payments as agreed, so carefully assess your financial situation before committing to this kind of loan.
Depending on what you need the loan for, you could opt for an unsecured personal loan. Unsecured loans don’t require collateral. Although interest rates are higher, you won’t need to put anything up for it. You could also look into lenders who offer loans for those with lower credit scores.
Since you likely want to cut costs in other places, consider using the
Jerry
app. Jerry can help you find the best rates available for your car insurance in a matter of minutes. Just download the app, answer some quick questions, and join the other Jerry members saving hundreds on their policies. The average Jerry user saves $879 per year!View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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