What exactly is an equity loan? You may have heard the term before, but we’re here to clear up any confusion.
At its core, an equity loan means borrowing based on an asset that already own.
One example is a home equity loan. When you take out a home equity personal loan, you are taking out money against the equity in your owned asset — your home. Essentially, you are putting up your house as collateral.
The same is true for other types of equity loans:
- In a car title loan, you are borrowing against the equity in your owned asset, your car. If you can’t repay the loan, your car is the collateral.
- If you have another asset, like gold, you are using that asset to prove that you can pay off the loan even if you don’t have the cash available.
Benefits of an Equity Loan
An equity loan is a secured loan based on the value in your assets. This can offer several benefits — including less credit checking.
If you have a bad credit score, that doesn’t matter as much with an equity loan. Because you are proving that you already own the asset, the lender will be able to collect on their debt even if the loan is defaulted.
You can also usually get better terms on the loan than you would without collateral being offered. Most equity loans come with a fixed interest rate and a fixed re-payment schedule, so you can plan out exactly what you will owe and when you will owe it.
Who are Equity Loans For?
If you have an asset, like a home, paid-off car, or gold, with value, an equity loan may be for you.
If you are confident that you can stick to a repayment schedule and practice good payment habits, such as paying back your loan on time and in full each, an equity loan may be for you.
If you have a bad credit score and are looking to rebuild credit, an equity loan may be for you.
Find out if you’re eligible for an equity loan today.
Prudent Financial is a Toronto equity lender with low rates for bad credit loans.
Contact us for a free consultation. Call 1-888-852-7647 or visit www.prudentfinancial.net.