Can I borrow some funds against my auto loan?
"Is it common practice to borrow money against your car? I want to get money for a purchase and I don't own a home, so I wanted to see if I could borrow cash against my auto loan."
“You can definitely borrow money against your auto loan if you have positive equity in the car loan or if you have great credit.
If you have positive equity in your car, you can do a cash-out refinance. This allows you to refinance the value of your car, even if it results in a larger loan than what you currently have to pay.
For example, your car could be worth $15,000, but you have it paid down to $12,000. You could do a cash-out refinance for the full $15,000, pay off the original loan of $12,000, and put $3,000 in your pocket.
If you have credit, you might also be able to do a higher loan-to-value refinance or auto loan. This is a V.I.P. style treatment for those that have phenomenal credit, usually 800 or higher.
In this case, you can usually get up to 25% more than the value of your car. For example, your car is worth $20,000, and you owe $13,500 on it.
Some lenders will let you get 125% of the value of the car, so in this case, you could get a loan for $25,000, pay off the original balance, and still have $11,500 to play with.”
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Read advice from car experts at Jerry
Browse by topics
What others are asking
Can I finance a car through the dealership the same day I find the car that I want?
"Can a dealership usually get financing the same day or does it take a few days? I’m looking to finance a new car but I don’t really know what to expect."
Jul 28, 2021
"Why is Equifax showing that my auto loan is closed? "
"I took out a four-year loan on a car two-and-a-half years ago and have never missed a payment, and my credit has continued to go up. But I got a recent notice that my score had dropped, so I checked to see why and apparently it is because my car loan is listed as being closed, even though it is not. What should I do about this? "
May 11, 2021
Why is it so hard to rent a car to go to Mexico?
I want to drive to Mexico, but every company near me restricts travel. Why don't companies allow you to travel to Mexico?
Aug 17, 2021