Can I take a loan out on my car?

I need some money for medical bills. I don't own a house, but I own my car. Is it possible to take a loan out against my vehicle?

Answer
Medical bills are the pits—I’m sorry to hear about that.
You can use your car as collateral for a loan. To take out a loan on your car, you have a couple of different options, like an auto equity loan or title loan.
Be warned that if you default on either type of loan, the lender has the right to repossess your vehicle. These loans often have high interest rates that can dig you deeper into debt, as well.
Auto Equity Loan: An auto equity loan is based on the equity, or value, of your car. You do not have to fully own your vehicle to apply for this type of loan.
  • Term length (aka the loan’s payback duration) can vary from months to years.
  • This is a secured loan, which equates to comparatively lower interest rates.
Title Loan: Because you own your car outright, you can get a title loan. These are short, high-interest loans. They are often considered predatory and are even illegal in many states. Be very careful if you go this route.
  • Term length might only be a few weeks or a month, making it near impossible to pay back on time.
Another option that doesn’t use your car as collateral is a personal loan. Even if you have bad credit, you can talk to lenders about getting a personal loan to help.
You should also reach out to various non-profits geared toward helping with medical bills. Services vary depending on the state you live in, but this is one option that may help you out without the threat of repossession.
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Lauren Smith
Answered on Nov 19, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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