Like homes and jewellery, a car is also an asset. It has a value attached to it and that value is in the form of its selling price. A car is a common asset that is owned by most. It may be new or second hand. A house is a lot more expensive than a car; so 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 car 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 car depends on the value and the amount you owe to the lender.

Finding out your Car Equity

There are two elements that 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
You will need to subtract the outstanding loan balance from the actual value of your car. If the number is positive, that is, the car you own is worth more than the outstanding loan balance, then you have a positive equity. But if you owe more loan amount on your car than the actual car value, it has negative equity. Equity means, how much of the car you own in monetary terms, like dollars.

How to Determine your Current Loan Balance?

A monthly statement from your car loan provider can be a starting point. If you don’t get a monthly statement, then you can find the information online. The statement or online portal will tell you how much is still pending from your side or the amount you still owe on a car loan. In case, you don’t find such information as mentioned above, you can contact the lender for the detail.

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 car. Once you buy a car, you tend to use it and put mileage on it. There must be some consideration for wear and tear and the mileage which means the value of the car will be less than the amount you paid for it when it was brand new. Even if you have hardly used the car, the actual value may not be similar to the one when you bought it.
  • Trying to determine the value on your own will be tricky, so you can use other options – appraisal from a car dealership or using 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 value of the car 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 it as interest rates are better. There are online aggregators as well as businesses that will give you information if you search for car title loan places near me ,Click here.