When is the Best Time to Apply for a Car Collateral Loan

If you find yourself short on money and you own a car, getting a car collateral loan is an excellent option to consider. But while pledging your car for cash is easy enough to do, knowing when’s the best time to do so is quite another story. So to help you out, we’ve listed a few useful tips below.

Be Qualified for Larger Loans

Technically speaking, you’re already qualified to get a loan since you’re reducing the lender’s risk by pledging your car as collateral. But if you have a higher credit score, you just might be able to get a better deal. So if you’re planning to request a car collateral loan, better make sure you apply when your creditworthiness is at an all-time high.

Have Other Valuable Assets to Offer

Obviously, you need to have a vehicle to offer as collateral before you apply for a car collateral loan. But it would also be helpful if you have other assets that can serve as alternative collaterals. Just make sure these extra collaterals are something you’re willing to part with. That way, you can use them to pay off your debt and get your car back if necessary.

Your Money is Tied Up in Assets

If you do have money to spare but can’t currently use it because it’s all tied up in the other assets you own, then using your car to get collateral loan offers a quick way you can get extra cash. Not only does it help you get short-term liquidity, but it also removes the need for you to sell your other assets for cash.

There are No Other Debts to Pay

Lastly, the best time to get a car loan is when you have no other debt obligations. That way, you’ll be able to better focus on paying off your loan and getting your vehicle back from the lender. And as mentioned above, having a high credit score can help you land a better car collateral loan package; by being debt free when you apply, you’ll further convince lenders of your creditworthiness.

The Takeaway

If you’re seriously in need of money, it can be very tempting to max out your credit card or request payday advance. Applying for a car collateral loan instead can help you avoid harming your creditworthiness and trapping yourself in a cycle of massive debt. So better include it in your options.