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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?

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Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
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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MORE: How to refinance a car
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