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An auto equity loan is similar to a title loan; however, there are a few major differences. Just like a title loan your vehicle is used as collateral with an auto equity loan. A lien is placed on your vehicle until the loan has been repaid in full. You will also have to give up your title until your loan has been repaid.
Auto equity loans are different than title loans as they are meant to be long term. Most title loans require a full payoff within the first 30 days. With an auto equity loan you will be able to make monthly payments just like a regular auto loan. You will receive a regular monthly statement to help you track the progress of your equity loan. At the end of the loan there will be no balloon payment to worry about with an auto equity loan. This makes an equity loan a much better solution for those who need to borrow for an extended period of time than a title loan.
Like the name suggests, you will be borrowing on the equity in your vehicle. The amount you will be able to borrow depends a lot on how much your vehicle is worth. Depending on the lender you go through, you will be able to borrow about 50% (or more) of the current total value of your vehicle. The amount you are allowed to borrow depends on a lot on your credit history as well. If you have a great credit history you will be able to borrow more. If you have a bad credit history you may be denied completely when applying for an auto equity loan, although most lenders are able to bypass credit checks due to the secured nature of the loan.
This depends a lot on the lender you go through, although there are a few criteria that most require such as:
Most auto equity lenders make it easy to get a loan but may require the following documentation to get started: