Cash Out Your Auto
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What does Cash Out your Auto mean?
A Cash out your Auto is a process where you replace your existing auto loan with a new loan that is larger in amount. This new loan pays you the difference between the amount borrowed and the total amount you owe on your vehicle. If you own your vehicle outright, you can still benefit from a cash-out refinance by using the equity in your vehicle to get a lower overall interest rate and consolidate your debts.
You can borrow against its equity at a much lower rate than getting a personal loan. For instance, let’s say John owns a 2020 Dodge Ram, and its NADA value is $35,000. In that case, he can borrow up to 90% of the NADA value, which is $31,500, as a vehicle loan. Your car will be held as collateral against the loan, allowing you to borrow against your equity at a lower rate, instead of paying a higher rate on an unsecured loan.
You can borrow up to 90% of the NADA value, but the vehicle cannot be more than 7 years old, and the maximum term for the loan is 60 months.
Cash Out your Auto Refinancing Process
The process for refinancing your car loan is quite simple. You can either speak to your credit union’s lending expert or fill out an application. However, before you begin, you should consider a few things.
Firstly, it’s essential to know your car’s or truck’s value. Research and look up the value of your vehicle on the NADA website at http://www.nada.com/.
Secondly, your credit score determines whether you can get the financing you want and what interest rate you’ll qualify for. Therefore, it’s essential to consider your credit score before applying for refinancing.
Lastly, before making any financial decision, examining why you want to refinance is always a good idea. Consider the benefits you will reap from refinancing, how it serves your financial interests, and how it fits into your financial picture.
Example:
Let’s say Megan owns a 2023 Mazda 3, valued at $27,000, and has an outstanding balance of $18,000 on her current loan. The Credit Union allows her to borrow up to 90% of the car’s value, which means she can borrow $27,000 * 90% = $24,300.
To calculate the cash-out amount, we subtract the outstanding balance of $18,000 from the maximum amount she can borrow, which is $24,300. Therefore, Megan can get $6,300 in cash by refinancing her auto loan. The process involves obtaining a new auto loan for $24,300, paying off the existing loan of $18,000, and then receiving the remaining $6,300 as cash.
Benefits of Cash Out Your Auto
Contact your Loan Specialist for more Information!
Please ask if you want to learn more about how a cash-out refinance loan can work for you. Our team can discuss your auto loan options from Monday to Friday, 9AM to 4PM (EST).
To inquire about a Cash-out Refinance or seek advice, call us at 516.822.1070. Alternatively, you can apply for a Cash Out Your Auto Loan Application online.
