By Tony Kountoupis
Amplify Credit Union
Have you ever thought to yourself “How can I combine my monthly payments into one loan?” Most of us have, but when we ponder this we often come to the same conclusions:
- I could do a balance transfer to a new credit card with a 0% for 6-12 months depending on the offer. This is a great option but it’s a temporary fix because once the 0% goes away the interest rate will go up significantly. Also, most credit cards charge a balance transfer fee!
- I could go to my financial institution and ask for an unsecured loan so that I can make just one payment instead of several. Hopefully the rate on the consolidation loan will be lower than your current interest rate, but it can still affect your credit rating to carry a large amount of unsecured debt.
- I could look into a Home Equity loan. This product will offer a lower rate but this only works if you’re a homeowner and you have equity available in your homestead. And while you will likely get a better rate on a Home Equity loan, that process can be time consuming and sometimes requires you to pay closing costs.
You may want to consider a cash-out vehicle refinance. In other words, use the available equity in your vehicle to get the loan you need but with the nice, low rate of an auto loan.
It doesn't have to be for debt consolidation either. Maybe you realize that you have a large expense or purchase that would normally prompt you to apply for an unsecured loan or open a new credit card. I have personally known people who have used the equity in their autos to pay for unexpected medical and dental bills, home repair, auto repair, furniture purchases, or even vacation funds.
Not sure how much your vehicle is worth? You can look up the blue book value online at the website for the NADA price guide www.nada.com. This will give you an idea of the available equity in your auto.
You’ll also want to make sure that your financial institution will allow this type of request and ask how much equity they will allow you to take out. Assuming they have this product available, then you just need to go through the normal auto loan application process. The other things to keep in mind is that most auto loans require that you carry full coverage insurance, and if ownership is changing on the title then there may be additional tax, title, and license. Don’t be afraid to ask questions when inquiring about this process.
So when you’re in need of funds and weighing out your options, consider borrowing against the auto that you already own; you can also refinance your current auto loan for some additional cash out. It’s a great way to borrow at a lower rate and save on finance charges.
Interested in a Cash-Out Vehicle Refinance?
Amplify may be able to help, and we offer some of the lowest auto loan rates in the Austin, TX area. Depending on the year, condition, and how much you owe on your vehicle, Amplify may be able to lend up to a certain amount of your vehicle value. Simply have your VIN, mileage, income, and personal information available when you apply.