Is it possible to get a loan using the car as collateral?

Our vehicle can allow us to get out of trouble at any given time without having to do without it and even though our financial situation may make us believe that it is impossible. This is how a credit granted from a vehicle as collateral works.

Sometimes, we can find ourselves in a situation where we urgently need money and circumstances make it impossible to get a traditional bank loan. A solution may be to use the car as collateral or, in other words, pawn our vehicle.

Currently there are companies that grant loans of more than 1,000 euros to clients included in ASNEF (list of the National Association of Financial Establishments that identifies unpaid debts), as well as to pensioners, unemployed or self-employed . To do this, we will use our vehicle as a guarantee of payment, but what does the guarantee or pawn of the car consist of?

How does a loan with a car as collateral work?

The first thing we must bear in mind is that, although the car acts as a payment guarantee or guarantee, we can continue using it without having to pay rent or similar. Simply, we will receive the agreed money with the condition of repaying it with interest. If this were not the case, then the borrowing entity would keep the car in property to compensate for the debt incurred.

Therefore, although it is also called a pledge, we can continue using the car as long as we meet the repayment installments of the loan. It is also true that if the requested amount is very high, we can access it by giving up the use of the vehicle and giving it up during the loan repayment period.

How much money can I get?

It is important to know that we can only access a loan of these characteristics if we own a vehicle that is less than 10 years old. If so, and regardless of whether we carry a history of delinquency due to non-payment, the usual thing is that the borrowing entity grants us a maximum of 80% of the appraised value of the vehicle.

For example, if we have a Ford Focus 1.5 TDCI Trend 95 from 2015 with an estimated market value of 16,400 euros according to the BOE, we can have a maximum of approximately 13,120 euros. In any case, at we offer you a more precise and complete tool to appraise your vehicle online and thus get an idea of ​​the loan you can get:

Regardless of all this, we must make sure that we can repay the loan or we will lose the car. In addition, we must be very clear about the interest applied to it, as well as the rest of the financing conditions and that these are not actually a contract for the sale of the vehicle with a change of ownership.

How long will it take to receive the money?

These operations are usually faster than the traditional ones, but in any case it will be necessary to go through the appraisal of the vehicle first so that the financial company establishes a maximum loan amount. Once the data has been verified, it will be time to sign the contract, which can take between 48 and 72 hours.

What requirements must I meet?

Although the conditions are less strict than in the case of a conventional loan, the truth is that we must meet a minimum to be able to access this type of credit:

  • Be the owner of a vehicle less than 10 years old that is free of charges.
  • Have updated and valid documentation (DNI, NIE or passport).
  • Have the car documentation in order (technical sheet, road tax or IVTM and ITV ).

The usual thing, as we have already mentioned, is that financial institutions do not accept a car that is more than 10 years old as collateral due to its low market value. However, there are some that specialize in this type of case and if the vehicle is high-end it will be easier for the entities to accept it as a guarantee of payment.

On many occasions, the online forms reject vehicles over 10 years old by default, so in these cases it is advisable to call and present the situation so that a commercial agent assesses the feasibility of the operation.