One of the benefits of refinancing a car loan is that you can take out some cash during the process. This is sometimes called a “cash-out auto refinance” or an “auto equity loan.”
Refinancing with a cash-out loan can be a great way to put some money in your pocket if you need an emergency fund or have sudden expenses you need to take care of.
When you take out a cash-out refinance auto loan, you borrow more money than you owe on your car. Usually, lenders will let you borrow against your auto equity.
You can figure out how much equity you have by subtracting your car’s value and the amount left on your loan. For example, if your car is worth $8,000 and your loan balance is $6000, then you have $2000 in equity.
Depending on your credit score and payment history, a lender in the above example might give you a refinance car loan with up to $2,000 in cash out.