Loan with vehicle guarantee: how does it work?

If you have a paid vehicle, know that you can use it to get a credit line. It is more and more common in the market, the practice of taking a loan with a vehicle guarantee.

This modality brings a series of advantages for those who are in need of a reasonable amount of money, quickly and with less bureaucracy.

Vehicle refinancing


This type of credit, which is also known as vehicle refinancing, requires the need to leave the asset (motor vehicle) as collateral in the financial institution in order to obtain the loan.

To help you better understand the concept, we will explain how this loan modality works, in addition to showing all the advantages and disadvantages of this credit category.

And, in the end, we will show how it is possible to make this type of loan in four steps, in addition to solving the three main doubts that usually arise on the subject. Find out more below!

How does the vehicle guarantee loan work?


When applying for your vehicle loan with a financial institution, a credit assessment will be carried out, using several criteria for approval, such as:

  • name restriction analysis;
  • score score;
  • payment capacity to stipulate the total amount that can be made available to the applicant;
  • among other criteria.

If the financing is approved, the car will be evaluated through a pre-schedule. The main items evaluated are:

  • year and model of the car;
  • conservation state;
  • mileage and;
  • the value of the car.

Generally speaking, a new, little-used car and current model will guarantee lower interest rates and a much higher acceptance rate as a guarantee, as older vehicles (10 years or older) will have higher interest rates or may not be accepted by the institutions.

Generally, institutions provide a loan between 50% and 90% of the car’s appraised value, which will be used as collateral, however, this number may vary. The evaluation quotation is based on the FIPE or Molicar Table, in addition, of course, to a careful analysis carried out in a partner company of the financial institution.

Once the vehicle is collateralized by a financial institution, the asset is considered to be sold, therefore, it cannot be sold until the debt is fully paid off.



The main advantage is the rates and interest, which are much lower than those charged in the personal loan since the borrower will offer a valuable asset (car or motorcycle) as collateral.

Another advantage is the issue of agility and the reduction in bureaucracy. Here on the Good Finance website, the process takes between 2 and 5 business days until the resource is released. The issue of documents, however, will require only the basics, such as ID, CPF, proof of residence and income, in addition to vehicle documents that will only be requested after the profile analysis is approved.

We also highlight as a benefit the fact that the loan can be used for any purpose, that is, the amount obtained can be used in any way the borrower wishes. There are many cases where people exchange their most expensive debts for cheaper ones, through auto refinancing. The best example is for those with high credit card debt that has the interest of approximately 15% per month.

The newer the vehicle, the greater the value made available by the financial institution. Thus, this type of loan is perfect for those who have a new vehicle and want to use it as collateral in exchange for credit.

Another advantage that we can highlight is that when choosing the type of loan with a vehicle guarantee, the borrower may have a dirty name. However, we must emphasize that there is a credit analysis and the financing may or may not be released by the financial institution.

Some banks make life easier for borrowers when they choose to debit. Such action becomes an advantage at the time of credit approval, in addition to simplifying the time for payment of installments.

People who have no history with banking institutions or have few negotiations are at a disadvantage when trying to obtain financing. Through the vehicle secured loan, such individuals end up having the benefit of obtaining the credit and, they can still acquire higher amounts and lower interest rates that are offered in other types of loans by banks.

Main advantages:

  • lower than usual rates and interest;
  • agility and less bureaucracy;
  • release of the loan within 48 hours;
  • new vehicles release higher values;
  • it can be used for any purpose, including paying other debts;
  • the borrower may have a dirty name and;
  • facilities for those who choose automatic debit as a form of payment.

Compare below the interest rates of the Vehicle Guarantee Loan (Refinancing) with other modalities:


Like other types of credit, this type of loan also has some disadvantages.

The biggest disadvantage that can be related to this type of loan is the possibility of losing the vehicle if the debt is not paid correctly. Therefore, it is very important to carry out a lean financial planning so that there is no shortage of the amount to pay off each installment of the loan.

Another con of this credit line is that older vehicles are often not accepted by financial institutions. We must exclude collectors’ cars from this list, after all, many of these vehicles have high valuation values.

Another disadvantage in this type of contribution is that the vehicle must be paid in full and in the name of the borrower. Attention: even if the policyholder is married, the car cannot be in the name of the spouse. One more con that we must highlight is that the goodwill is alienated. This means that it cannot be sold until the loan is fully paid.

We must also warn that even receiving a good as a guarantee, no financial institution is obliged to grant the credit. Therefore, they do an initial analysis in order to define whether there will be a release or not. At this point, the negative name and the low score will make all the difference.

And the last disadvantage highlighted is a careful inspection. Remember that the car evaluated will be the maximum amount to be released as credit, thus, companies seek to carry out a careful assessment in order to offer the real value of the vehicle.

Main disadvantages:

  • possibility of losing the vehicle;
  • old cars are not always accepted;
  • vehicle must be paid in full and in the name of the policyholder;
  • the car will be alienated;
  • no company is obliged to grant credit;
  • Careful inspection of the vehicle.

Before taking a loan with a vehicle guarantee, the tip is to consider all the advantages and disadvantages of this modality, always taking into consideration the urgency in obtaining the financing.