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Auto Equity 101

Learn the basics of managing debt with car equity

Consolidating your debt

You may be able use your car’s equity to combine some or all of your debt while possibly lowering the overall amount you pay each month.


Cars have value that can be used as equity. This equity can help car owners consolidate debt, manage unexpected expenses, or fund large purchases.

There are two common borrowing strategies using a car’s equity:

With these types of loans, you may be able to:

  • Simplify your debts. Pay off other types of debts and potentially only have a single monthly payment.
  • Take care of unexpected expenses. Pay off unplanned expenses with the available funds.
  • Make a large purchase. Use the available funds if you’ve been planning on making a large purchase, but didn’t previously have the funds.
  • Enjoy convenience and flexibility. Choose a different term and different payment options to better fit your needs.
  • Have peace of mind. Benefit from consistent monthly payments with a fixed rate, paying the same amount each month. And you will not be penalized for paying your loan off early.

If you’re a Wells Fargo customer

You may be eligible for rate discount with a qualifying Wells Fargo consumer checking account while maintaining automatic payments.

There are myths and misconceptions about accessing cash with your car’s equity. Here are some common myths debunked:

Myth: Debt consolidation loans are for those with a tremendous amount of debt or in a desperate financial situation.
Truth:
You do not need to have tremendous debt to benefit from debt consolidation loans. Managing finances and consolidating loans are beneficial for all people looking to optimize their current financial situation. For example, you can consolidate as few as two credit cards with high interest rates into one low interest rate that may potentially lower your monthly payment or total finance charges.

Myth: My car is too old and has too many miles on it to have any real equity.
Truth:
Cars are retaining their value for much longer than they did in the past. Consult these reference guides to see how much your car may be worth:

Myth: I shouldn’t use my car’s equity to get funds because I will be opening a new secured loan, and secured loans have high rates.
Truth:
A secured loan typically has a lower interest rate than an unsecured loan because you have collateral to put against it.

Myth:  I won’t be able to consolidate my debt and also access funds.
Truth: In many cases, our customers are able to both consolidate debt and also receive available funds for unexpected expenses or large purchases.

Before you apply, you’ll need to gather the following information:

Personal and contact information

  • Date of birth
  • Social Security Number
  • Citizenship status
  • Marital status
  • Email address
  • Home address
  • Home telephone number
  • Previous address (if at current address less than 3 years)
  • Residence status (own or rent)
  • Monthly mortgage or rent payment

Employment and income information

  • Employment status
  • Employer name
  • Occupation
  • Work phone number
  • Previous employment information (if at current employer less than 3 years)
  • Gross monthly income amount and other income sources

Auto information

  • Year of vehicle
  • Make and model
  • VIN number
  • Mileage

When applying for your loan to access your car’s equity, you may want to consider a co-applicant. A co-applicant is an individual who enters into the refinance or vehicle equity loan with you, and may maintain part ownership of the vehicle under that loan.

A co-applicant may help you qualify or get a lower rate if you:

  • Are establishing or building credit
  • Have a lower credit score
  • Need additional income from another person to qualify for  the loan

You will need to discuss the responsibilities and details of your loan with your co-applicant so they can know what to expect. Co-applicants may refer to our application checklist, as well.

When should I consider using my car’s equity?

Consider using your car’s equity with a loan if you:

  • Are unable to comfortably pay off existing debts
  • Have one or more debts with a high interest rate
  • Want a secured loan and a potentially lower rate
  • Are faced with an unexpected expense
  • Need cash for a large purchase
 

If I have a lower credit score, can I still use my car’s equity for a loan?

Even if you have a lower credit score, you may still have options. Wells Fargo provides auto equity options for customers with most types of credit.

 

How will my new loan be different if I refinance with additional funds?

Receiving funds for equity means your total loan amount will be higher than your current loan, although this does not necessarily mean a higher monthly payment. For example, a higher total loan amount coupled with a longer loan term could result in a very similar monthly payment to what you pay now.

 

Is it easy to apply for an auto equity loan?

Yes. It only takes about 5-10 minutes to apply and get a credit decision and rate. A Wells Fargo Auto Finance Specialist will contact you shortly after applying, and if approved, you may receive your loan the next day. See our checklist to prepare for your application.

 

How does the loan application process work?

Applying is simple and only takes 5-10 minutes to get your credit decision and rate

  • Apply online
  • Discuss and select a loan option with a Wells Fargo Auto Finance Specialist
  • Complete and submit your loan documents

If approved, you’ll receive your loan quickly — typically within a day — and will be able to access your account 24/7 with Online Banking with Wells Fargo Online®.

Ready to apply? Apply Now

Contact an Auto Loan Specialist today at 1-877-590-7776