Are instant approval car loans real? Yes, they are. Credit lenders understand that you need a good car that will get you to school and work on time. Businesses also need vehicles to make deliveries and expand to new market territories. If you’re planning to apply for one, today’s your lucky day because we’re going to look at how they work and compare them with two common auto financing methods.
1.Types of instant auto loan approval
1. Student car loans
College students have challenges getting the cars they desire because banks turn them down due to insufficient credit score along with low credit scores. Truth is, not everyone can afford to save up for a used car especially when someone has no parent or sponsor to depend on financially.
Creditors understand this challenge and enable you to achieve your goals by offering a student car loan. All you need to obtain financing are copies of your recent pay stubs, proof of identity, and the proof of the college or university you’re currently enrolled at.
2. First-time car buyer
So, let’s say you’ve just relocated to America from Europe and Canada. Just like a college student, you don’t have sufficient credit history or credit ratings to get an auto loan from a bank. It’s also hard to get a buy here pay here financing when you haven’t resided in the same place for at least 12 consecutive months.
Does this mean that you can only get a car through a cash purchase? No, it doesn’t. You can still get a new car shopping for creditors offering auto loans online instant approval. This way, you’ll get a reliable car within a week.
3. No credit check
An unfortunate turn of events can have a massive toll on your credit ratings. Most divorcees usually experience this financial challenge once the dust settles after court. It’s hard to get a car loan from your usual lender once they notice the major dip in your credit score.
If you’re facing such a situation, you can still own a car by applying for an instant auto loan. Some lenders only want to assess your cash flow and verify your identity. So, you’ll just present your driving license and bank statements.
4. Bankruptcy car loans
Chapter 13 Bankruptcy allows a credit defaulter to apply for an auto loan after obtaining court approval. However, small and medium-sized credit lenders feel wary of offering to finance to such buyers due to the high risk of default involved. In this situation, you just need to find a lender who offers financing to buyers with bankruptcy records.
One advantage is that you might come across lenders who don’t check their buyers’ bankruptcy status. This is a huge relief because it saves you from the awkwardness of having to explain your situation in front of a credit officer.
5. Auto loan bad credit instant approval
Is your credit score below 500? That’s an indicator of low credit. Some bad credit lenders only offer auto financing to buyers with at least 500 or 550. Truth is, building up a credit score takes several months.
The good news is that you’ll find online credit lenders who are willing to take the financial risk with you. Even if the loan you get is just enough for a used car, it’s better than riding the bus any day of the week. Especially when you have a family because you need a car for both your basic and recreational needs.
2. Pros of getting instant approval auto loans
1. Enables good people in bad financial situations to have private transportation
Bad credit ratings aren’t always an indicator of financial irresponsibility. Most college students have low credit scores because they’re on their first or second credit card. The modest credit amount they spend each month yields little improvements but that doesn’t mean that the student is too broke to own a car.
Credit lenders who offer instant auto financing help good people manage and eventually come out unpleasant financial situations. The process is simple and fast to enable you to get back on your feet after coming out of a bankruptcy or divorce.
2. You can get a new car through negotiation
Usually, online lenders offer enough money to get you a used car. Why do they do this? Because it’s highly risky offering credit to a debtor who’s been rejected by mainstream lenders due to failing to prove financial stability. Does this mean that you can’t get a new car?
Fortunately, you can convince your creditor to give you more credit by proving you can make high monthly payments consistently. If you earn more than $2,000 a month, you can convince the creditor to offer you enough money for a new car as long as you commit to paying $600 a month.
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3. A wide variety of options
Due to the high demand for cars all year round, you’ll come across various financing packages. Every credit lender wants you to choose them over their rival and that’s why you’ll come across different interest rates and down payment requirements.
As a buyer, this is an advantage because you have the opportunity to pick the best lender that suits your current financial situation. Doing this enables you to save money and identify a long-term partner for your car purchasing needs in the future.
4. Build an auto credit history
What is an auto credit history? It shows your performance with car loans that you took in the past or currently servicing. Auto finance companies use this information to assess your risk of default when processing your loan application form.
If you’re a first time car buyer, you definitely need an auto loan to enable you to buy a better car in the future. Getting an instant auto loan builds your auto credit history because your second lender will have a point of referral when looking at your auto loan application.
5. Improve your credit score
Financial experts advise debtors with low credit scores to raise their ratings by applying for big loans. One way of doing this is applying for an instant car loan. Why does this work? Due to two important reasons.
Car loans usually involve amounts ranging in the tens of thousands of dollars. If you’re a freshly-graduated college student, mainstream lenders will limit you to borrowing a few hundreds of dollars. By getting instant approval financing, your credit limit rises significantly and this boosts your credit score.
Second, the lengthy repayment period enables you to improve your current credit score. Payment history accounts for 35% of your credit ratings and it’s easy to maximize your score when your repayment period exceeds 24 months.
6. Freedom to refinance
Auto loan refinancing is whereby a credit lender restructures your outstanding balance to make your car payments more manageable. On one hand, it makes the loan affordable by reducing your monthly payments. If you currently face challenges paying $500 a month, getting a refinance deal can lower it to $350.
Does it mean that you end up paying less than your original car loan? No, it doesn’t because the creditor spreads over your monthly payments by increasing the repayment period. However, refinancing enables you to retain your car when facing temporary financial challenges.
3. Difference between instant approval and inhouse car financing
In House Car Financing
|The credit lender deposits money in your bank account once your application gets approved. This gives you the freedom to buy a car from your preferred dealership.||When the dealership approves your auto loan, they open a credit account in your name. A customer cannot use this type of credit to purchase a car anywhere else.|
Loan application requirements
|Online credit lenders expect the following from potential car buyers||You need the following documents when applying for a Buy Here Pay Here credit|
|The lender just gives you the money and lets you pick any car that’s within your purchasing power.||Some dealerships have pre-packaged deals for college students and first-time car buyers. This limits one’s freedom of choice because one has to settle for the dealer’s offer.|
Credit score check
|Some bad credit lenders set their minimum credit score requirement at 500. It’s hard to come across a genuine lender offering below this score.||Car dealerships don’t do credit checks because they’re targeting the market segment rejected by mainstream credit lenders.|
|Lenders operate purely on current interest rates. A subsequent customer pays the same interest as a day one. These type of lenders rarely have customer loyalty programs||You might get lower interest when you visit the dealership a second or subsequent time.|
4. Difference between preapproved and instant approval financing
Pre Approved Financing
Credit score check
|Mandatory because it’s usually offered by banks and credit unions||No credit score check unless it’s a subprime credit car loan|
Relationship with the lender
|One needs to be a client for at least 6 months.||Just fill in your details and wait for approval within 12-24 hours.|
Type of lender
|Banks and credit unions lend you their own money.||You might encounter middle-men lenders.|
|Very affordable because banks and credit unions focus on customers with good credit ratings.||Tends to be expensive because virtually all customers in need of this financing have bad credit scores.|
5. How to improve your chances of getting a pre approved auto loan
1. Get a permanent job
Credit lenders offering pre approved car loans usually take on higher financial risks than their mainstream counterparts. Why? Because almost 100% of clients needing this type of financing have credit scores below 550. So, in order to compensate for this credit deficiency, lenders focus on buyers with sufficient financial stability.
How do you obtain this type of financial status? By applying for a permanent job. A buyer with a constant flow of income is in a better position to make payments on time than one who depends on contract renewals after every three or six months.
2. Pay off your debts
Another way you can enhance your financial stability is by paying off your current debts. Creditors feel wary offering financing to a buyer who has a variety of debt-related monthly payments because it raises doubts as to whether they’ll make car payments on time.
So, work out a savings plan that will enable you to get out of debt through lump sum payments. The faster you get out of debt the sooner you can apply for pre approved financing. Avoid taking on more debt such as getting extra credit cards.
3. Apply for a reasonable amount
A credit lender can tell whether you can afford a car or not by assessing your annual income. However, some people tend to place a lot of expectations on their lenders and borrow huge loans. Unfortunately, creditors have to reject applications due to mismatched expectations and the reality of one’s financial situation.
Car loan experts usually recommend getting a car whose annual payments fall are just 50% or less of your annual income. Why is this important? Because apart from monthly payments, you still have to consider gas and insurance expenses.
4. Be ready to pay a huge down payment
Truth is, it’s impossible to find a creditor offering instant auto loans with no money down. The financial risk involved is just too high to offer such financing. Most lenders require you to cover at least 30% of the car’s price. Doing this is a sign of commitment and financial stability.
Since instant car loans have expensive interest rates, you’ll need a huge down payment to lower your monthly payments. In addition, it improves your rate of gaining equity to prevent the auto loan from going underwater. Save up at least 40-50% in order to enjoy these advantages.
5. Do follow-ups
Let’s assume that you’ve just come across a great online lender. You submit your details on their website then wait for a response. However, you notice that a couple of days have passed and you still haven’t heard from your potential lender. Should you give up and look for another one?
No, you shouldn’t. Sometimes, lenders get so busy processing new applications that they forget to follow up on previous applicants. Take the initiative of making a follow-up call to find out the status of your application.
6. How to avoid untrustworthy lenders
1. Avoid firms that charge upfront fees
When browsing the web for potential lenders, you’ll come across some charging upfront fees. That’s a glaring red flag because such websites usually disappear after scamming hundreds of victims. The law allows credit lenders to only hold on to assets as collateral for loans. No lender has the right to demand fees upfront.
2. Keep off firms that have a similar name to well-established credit lenders
Crooks use imitation to lure in their victims. Perhaps you’ve ever come across an online lender’s website that had a striking resemblance to that of a well-known bank. These scammers pay great attention to the colors and fonts on websites owned by highly trusted brands. That way, it’s easy to confuse their victims within seconds.
3. Be cautious of 100% guaranteed deals
A rational creditor offers financing only where there’s a high chance of getting back their money plus anticipated interest. That’s why creditors who offer secured loans ask for assets that are significantly more valuable than the debtor’s loan.
A creditor claiming to offer 100% guaranteed deals usually has an unpleasant catch. For instance, a list of costly hidden fees tucked at the end of your repayment period. Other creditors will pounce on you with unrealistic interest rates.
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4. Verify the website’s ownership
Why is it important to take this measure when looking for a good creditor? Because you need to establish trust before submitting your bank information online. Several people have suffered terrible credit score declines after identity thieves used their information to get car loans elsewhere.
5. Avoid lenders with unusual offers
Sly online creditors know how to entice debtors successfully using bait and switch tactics. Since they know that you want to pay the lowest monthly payment possible, they’ll play with the interest rates. For instance, offering 4 % interest in instant loans without doing any credit checks.
After six months, the creditor switches terms abruptly. One finds themselves obligated to pay up their outstanding balance at a double-digit interest rate. In the end, the car purchasing experience becomes unpleasant.
Are you ready to apply for one?
If your current car is no longer roadworthy and you have a low credit score, an instant auto loan will help you upgrade. This type of financing can help you get a car as a birthday gift conveniently even if you have bad credit.