Like homes and jewellery, a car is also an asset. It has a value attached to it in the form of its selling price. A car is a shared asset that is owned by most. It may be new or second-hand. A house is a lot more expensive than a car; many may live in rented homes but will have a car of their own. It makes life easier with a mode of transport around. You can finance the purchase of a vehicle through a loan or just buy it with the money you have saved. If you have used a loan to buy the car, then the equity in a vehicle depends on the value and the amount you owe to the lender.
Finding out your Car Equity
There are two elements you need to consider when finding out the equity of your car.
- The actual value of the car
- The current balance of your car loan
Equity means how many cars you own in monetary terms, like dollars. You will need to subtract the outstanding loan balance from the actual value of your car. If the number is positive, your vehicle is worth more than the due loan balance, and you have positive equity. But if you owe more loans on your vehicle than the actual car value, it has negative equity.
How to Determine your Current Loan Balance?
A monthly statement from your car loan provider can be a starting point. You can find the information online if you still need a monthly report. The word or online portal will tell you what is pending from your side or what you still owe on a car loan. If you don't find the information mentioned above, you can contact the lender for the details.
How to Determine the Actual Value of the Car?
Finding out your car's worth may be tricky as the automobile market is volatile and fluctuates every day. There are some factors to consider while determining the value of the vehicle. Once you buy a car, you tend to use it and put mileage on it. Even if you have hardly used the car, the actual value may differ from when you bought it. There must be some consideration for wear and tear and mileage which means the car's value will be less than the amount you paid for it when it was brand new.
- Trying to determine the value on your own will be tricky, so you can use other options – appraisal from a car dealership or an online tool.
Why is Equity Important?
Equity can be used when getting a loan. This equity can be used for refinancing options. If the car's value is A, and the outstanding loan is B, you can get the A amount, pay off B and have money left over for your other expenses. Many institutions offer car equity loans, and people prefer them because interest rates are better. Some online aggregators and businesses will give you information if you search for car title loan places near me; click here.
