Houses and cars are the two most common things that people own that are considered assets where loans are often involved. To buy either of these things, many people take out a loan to get them, then pay them off later. If you have a home mortgage or a financed car, it either has positive or negative equity (hopefully the first one). If the thing you own is worth more than the balance you still owe on a loan, it has positive equity. If you owe more than your house or car is worth, it has negative equity.
When someone has equity in their car, it means that it is worth more than what they still owe on it. Basically, equity tells you in dollars, how much of the car you actually own.
You can calculate your car’s equity with some simple math: just subtract the total amount you still owe to the bank or dealership from the actual value of the car. That’s the easy part. The harder part is finding out what these numbers are in order to do the math.
If you own your car outright and are not making car payments right now, congratulations. You can skip to step 2 to find out your car’s value because without a current loan, the equity in your car is simply how much it’s worth.
How to Find the Equity in your Car
1. Find out How Much you Still Have to Pay on the Loan
If you get a monthly statement and keep the paperwork or if you have online account access to your loan information, this should be relatively easy. These things should be able to clearly tell you how much you still owe on your car loan.
If not, you will need to contact the bank or dealership to ask for a current payout amount on your loan. Make sure to ask if there are any penalties for paying off a loan ahead of schedule and include that number in your payout amount.
2. Find your Car’s Actual Value
Trying to price your vehicle’s value on your own can be a little difficult, because the auto market fluctuates depending on the season, the year and even the day. You might remember how much you bought your car for, but you’ve probably put some wear and tear and mileage on it since then making the value go down. Even if it’s still in a similar condition to when you bought it, the price you paid isn’t necessarily accurate to the car’s actual value.
Instead of guessing, there are two common ways of determining the actual value of a car. You can:
Get an Appraisal at a Car Dealership
You can go to a reputable used car dealership to get an accurate appraisal of your car. If there’s a used car auction house close to you, they should be able to give you an appraisal as well. This might be the easiest and most accurate way to determine your vehicle’s value because dealerships are everywhere and real people can usually give more accurate analysis than a computer.
A manager at the dealership should inspect the condition of your car and compare it with other vehicles on the market with similar makes, models and conditions to determine its demand and value. The whole process will take about half an hour and should be free.
A car dealer should be able to tell you what they think the trade-in value of your car is and the market value as well. These two prices are often different. Depending on what you want to use the equity in your car for, you can decide which number you want to plug into the equation.
Use an Online Appraisal Tool
There are a lot of websites with online appraisal tools to help you know the value of your car. One of the most trusted resources is the the Kelley Blue Book (KBB) site, which will estimate the market value for your car.
- Go to the Kelley Blue Book website.
- Click on the button that says “Check My Car’s Value.”
- Enter your vehicle’s information as accurately as you can.
- Type in your zip code. Largely depending on climate and terrain, the demand (and therefore, market value) of your vehicle can change based on where you’re selling.
- Find out your car’s style if you don’t know it. The style is the specific version of the particular model of your car. Each style has different features and equipment so the price changes with each.
- Take the car condition quiz.
- Select whether you want to know the trade-in value or the private-sale value of the car.
- Click on “Get Blue Book Value.” The range of values it gives will be an excellent idea of what your vehicle is actually worth.
You can also use sites like Edmunds, CARFAX, NADAguides and more to get an online appraisal of your car. Some sites also allow you to enter the VIN of your car to get an accurate price based on the history of your specific car.
The value that any of these appraisals gives you is going to be the number you use to calculate the equity.
3. Calculate your Vehicle’s Equity
Use the appraised value you found and subtract what you still owe on your car, including all loan payout fees if there are any. The difference is the equity in your car.
If you don’t have a loan on your car, you’ll subtract zero, meaning your equity is just the value that you found for your car.
Let’s take a 2013 Dodge Charger SXT. The Kelley Blue Book says that the value is $20,376 based on the make, model, style and condition of it. If the car owner still owes $10,500 and their lender charges a $150 payout fee, the equity in the Dodge Charger is $9,726 after subtracting the two numbers.
4. Use the Equity in your Car For a Car Title Loan
With LoanMart, you can use this equity to borrow money quickly and easily when you need it. Using the 2013 Dodge Charger above as an example, the car owner might be able to use the equity to take out a car title loan for around the amount of $9,726.
At LoanMart, we do our own evaluation and appraisal of your car, but it works similarly. Based on what we think the equity in your car is and your ability to pay a loan, you could get a loan using this equity.
It works using your car title, so although you would be taking out a loan that is based on your car, you don’t have to leave it behind.
Fill out our form online, or give us a call to find out more about how you can use the equity in your car to get a car title loan from LoanMart. You might be as little as one business day away from getting money.1