Can I use my car as collateral for a non-car loan?
I want to get a loan for an ATV. I own a car outright. Can I use my car as collateral for the loan?
Yes, you can use your car as collateral for another loan. However, there are a few caveats:
- You must have positive equity in your car
- You can’t borrow more money than you have positive equity
The best-case scenario is if you own the car outright—which it sounds like you do! That way, you won’t have to worry about car liens or overextending your finances.
If you have negative equity on your car loan, then you likely can’t use it as collateral because you owe more than the car is worth. In this case, consider paying down your car loan or asking your lender if you qualify for an ATV loan.
Want to save money to buy your four-wheelin’, thrill-seekin’ ATV? Save money on car insurance with the Jerry app.
Jerry allows you to compare rates from dozens of top insurers. Once you choose a better policy at a better price, Jerry takes care of the paperwork and even helps cancel your old insurance. The average Jerry user saves $879 a year on car insurance—a whole lot of money you could use for your ATV.
MORE: Types of insurance
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