What is cash out and how does it work?

It's normal to have questions regarding auto refinances, especially when it comes to refinancing with cash out. The good news is that auto refinancing with cash out is simpler than you might think. Refinancing with cash out is simply using the equity you have in your vehicle to pay off other debts or to get extra cash for other purposes.

Here's how it works.

Let's say you have a car or truck. It has a book value of $17,000. You owe $13,000 on it. There is equity of $4,000. Simple enough, right? When you refinance the vehicle the proceeds are used to pay off the $13,000 loan and the difference can be cash out in your pocket.

Now you have established that there is equity in your car. Depending on whether you meet a few conditions for cash out refinancing such as condition of car, age of vehicle, mileage, and so on, you can move forward and apply for auto refinancing.

Cash Out Auto Refinancing Process

The process is pretty simple. You can speak with your credit union lending expert or fill out an application. However, there are a couple things you may want to consider.


  • You want to know the value of your car or truck - Do some research. Look at the NADA website at http://www.nada.com/ to get an understanding of your vehicle's value.
  • Consider your credit score - As with all kinds of lending, your credit matters in determining whether you can get the financing you want as well as what interest rate you qualify for.

With any financial decision, you'll want to examine why you want to refinance. You should think about what benefits you will reap from the refinancing, how it serves your financial interests, and how it fits into your personal financial picture.

How Cash Out Auto Refinancing Can Work For You

If done appropriately, auto refinancing can work for you in a couple of ways. Depending on your current financial position, you can use cash out auto refinancing to lower your payment or even lower your interest rate.

If you have questions about whether auto refinancing with cash out will work for you, you can always bring your questions to your credit union lending experts. They can answer your questions, review your options, and explain what they mean to you.

Here are some key points to remember:

  • Refinance your existing vehicle and "cash-out" the equity in your car up to 100% of the value
  • Utilize the loan proceeds beyond refinance amount for any purpose (pending approval and conditions)
  • Applies to current model year and 10 model year's back – i.e. 2007 and newer for 2017, 2008 and newer for 2018, and so on

Thinking of applying?

Start an application today

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