Cash Back Auto Loans


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When it comes to securing an auto loan, most of us focus on getting the financing we need for the car we want. Few of us consider the potential benefits of a cash back auto loan. But, for some, it may be the perfect financial fit.

What is a cash back auto loan?

A cash back auto loan is an auto loan that covers the cost of financing a vehicle and also provides cash to the borrower. In a sense, it is a traditional car loan and personal loan bundled together.

What are the benefits of a cash back auto loan?

Cash back auto loans can help borrowers:

  1. 1. Pay off existing loans that have higher interest rates.
  2. 2. Fund home improvements.
  3. 3. Cover medical expenses.
  4. 4. Purchase big-ticket items.

A cash back loan from your auto lender may give you access to interest rates lower than those available for a personal loan, or simplify your life by creating a single monthly payment.

Sometimes, borrowers seeking to refinance an existing auto loan may pursue cash back auto refinancing. It may be a good time to refinance if interest rates are lower, your credit worthiness has improved, or you need an additional source of cash. For non–home owners (who cannot tap into home equity), cash back auto loans are an effective alternative to borrow large sums, often up to $10,000.

What are some considerations before choosing a cash back auto loan?

As you may expect, getting cash back increases your total borrowing amount, which is repaid either through higher monthly payments or a longer loan term.

Make sure you understand fully the new terms of your loan agreement, even if refinancing allows you to lower your interest rate or shorten your loan term. Also, keep in mind the cost of refinancing your loan. That way, you ensure the savings and financial benefit outweigh the costs of processing and repaying your new loan.

Cash back auto loans offer near-term financial flexibility by borrowing against the value of your vehicle, especially if you are refinancing. This is similar to the mechanism behind home equity loans—you borrow money against the principal you have already paid on your mortgage. Just be aware that while homes typically maintain or appreciate in value over time, cars are considered depreciating assets.

It’s also worth noting that, if you do not repay your cash back auto loan, you may face repossession of your vehicle. If your vehicle is older or in poor condition, its value may not cover your outstanding debt. For prudent borrowers, these are not major concerns. But they are important considerations to ensure that you borrow responsibly—and work with a lender who has your best interests in mind.

Is a cash back auto loan right for me?

Like all loans, cash back auto loans are subject to credit approval. We work with more than a dozen banks, which can help you find the right lender, even without a perfect credit history.

Finding out whether a cash back car loan is right for you starts by discussing your near-term and long-term financial needs and goals. Fill out our online application today or give us a call to get the financial advice you need from a trusted, personal lender.

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