Can I get a personal loan using my car as collateral?

Question

I have a brand new car that is paid off the blue book on the car is 20000 on it. But now I need a 5000 loan and my credit sucks lol! Is there any way to use the car as collateral to take out a loan?

Answer 1

Sorry for being so obvious...but if your "credit sucks" how do you have a "brand new" car that is PIF (Paid in Full)?????????

Why don't you sell the $20,000 car and get a cheaper car, oh I don't know maybe worth $15,000, then use the $5,000 difference instead of getting a loan.

And the answer to your question is YES and absolutely YES they will take your car as collateral (put a lien on the title). They're probably hoping against all hope that you default on the loan, so they get your car. So you basically couldn't sell the car, trade in the car, as they would "own" the car and have a lien on the title.

Good Luck!!

Answer 2

Yes you can.

Go to a credit union or bank, preferrably one where you already have an account. Take the title with you.

You should have an idea of how long of a period you want to repay the loan.

Have a repayment plan in mind. You will have to have a source of income. Otherwise, no one will give you the type of loan that you would want.

Since you have bad credit, you will be charged a higher rate of interest, provided you do have a source of income. That higher interest rate may be 10 - 12 percent.

If you don't have a source of income, don't try to get a loan. The finance company will give you a loan at an outrageous interest rate and then come beating on your door when you can't make the payment and they will take the car from you and you will be left with 1/2 of what it's worth after they take their interest and collection fees from you.

Have you considered trading in the car for something at 1/2 of it's value? Then you would walk away with $10,000 and a car worth $10,000. Nothing wrong with that.

Ok, let's say you get a loan at 10 percent interest for the $5,000 you said you wanted and you have enough income so you get the loan from a bank or credit union: your monthly payment for a four year loan will be $127.00. I hope that is something you can afford.

Don't go to a finance company. If you can't get the 48 month loan from a bank or credit union you are going to get ripped off by a company that knows you are in trouble and is going to take further advantage of you. Sell your car if that's the case and by an inexpensive one. You will be happier in the long run.

Answer 3

You can use your car as collateral with some secondary lenders... but expect to pay an arm and a leg. Also, do you really want to put such an expensive asset at risk with your credit tax record?

My guess, and this is just a guess, is that the car was given to you or you inherited it. How else would a person with poor credit own something outright that is so expensive.

Now it sounds like you're ready to put that at risk.

Are you able to make the payments on a 5K loan? For 2 years, you're looking at a $300.00 a month payment. You'll probably be at or near the max that they can charge... probably 30% annually.

Before you ask if you can use the car as collateral, you should be asking if you really need the cash that badly. This is not my business, but what do you need the cash for? A NEED item, such as health care or something... or a WANT item, like a large screen plasma TV? If it's a WANT item, then forget it. Save enough money to pay cash. Only pursue something like this.. and only begrudgingly.. if this is a NEED item.

Good luck!

http://www.crown.org/

Answer 4

Yeah, but that's the worst way to do it (personal loans charge awful interest rates).

If possible, you'd be better trying to get a $5000 credit card. Sometimes you can put up a car as collateral on a credit card (my ex-gf's mother did that a few years ago). The interest rate wouldn't be much better, but you'd at least have a revolving credit line and more flexibility.

Also, a lot of times, taking out a personal loan will adversely affect your credit with certain banks. My friend who worked at a bank told me that they will look down upon personal loans.

Answer 5

Working in loans for a banking institution, we would most definitely accept the title to your car as collateral on a $5,000 loan. However, should you default, the car becomes our property, even though it is worth much more than the balance on the loan, so if you do this - make all payments IN FULL and ON TIME.

Answer 6

You can not get a personal loan, but it is quite possible that you can get a secured loan, using your car as collateral!

Check with your bank, or credit union first, or try a finance company!

Answer 7

You can approach a loan company about using your car as collateral, but a $5000 loan on a $20000 car is not realistic. the car's value can become substantially less in a very short period of time by letting a dog run around inside it, or sideswiping a tree, or an engine breakdown.

Answer 8

Yes but be prepared to be screwed. You usually can borrow 80% of low book value.

If ya need the money sell the car, buy a used $4000 car (you would be surprised what you can get) and use the other 5k. You should also be able to save.

Look up Dave Ramsey, financial responsibilty! Get yourself set on the right foot

Answer 9

If you don't have a source of income, don't try to get a loan. The finance company will give you a loan at an outrageous interest rate and then come beating on your door when you can't make the payment and they will take the car from you and you will be left with 1/2 of what it's worth after they take their interest and collection fees from you.

Answer 10

Yes, find a CU that will use it as collateral. You will probably be required to carry certain INSURANCE and make the CU beneficiary...