In most places in the United States, not having an automobile is just not an option. Public transportation may be spotty. Suitable and well-paying employment may only be available in other cities, so driving is a must.
One of the biggest hurdles to overcome in car ownership is financing. Few people have the resources to simply purchase a new vehicle from a dealer. Same-day or instant auto loans may work for you. But what are they? And what do you need to do to qualify?
What Is a Same-Day or Instant Auto Loan?
The term “same-day auto loan” is a bit of a misnomer. Some people refer to them as no credit check loans. These are loans that are extended by a dealer, a credit union, or a bank.
With a traditional dealer, the loan for a vehicle goes through a finance company. The finance company is the one that sets the rules for collateral, interest rates, and repayment. But with a same-day auto loan, the dealer finances the vehicles that it sells using its own money.
These dealers are not as interested in your credit history. What they want to know is if you have the financial ability to pay back the loan. The more income you make, the bigger loan you will qualify for.
Some instant auto loans require a down payment equal to the actual value of the car. Your future payments cover the profit that the car dealership is making off of the sale of the vehicle. If a vehicle has an actual value of $3,800 and the dealership is selling it for $6,800, you would need to come up with that $3,800 out of pocket. Over the course of the next few months, you would pay the additional $3,000.
There are also banking institutions and online lenders that offer same-day or instant auto loans. The approval process and requirements for these loans vary from institution to institution.
Some institutions require that you are 100% interested in purchasing a particular car. Others will simply approve you for a dollar amount.
With traditional auto financing at a dealership, the process can take a couple of hours, especially if you do not have all of your documentation ready. However, with instant car loans, it is possible for a lending institution to approve you in as little as 60 seconds.
Getting a Same-Day Auto Loan If You Have Good Credit
Getting a same-day auto loan if you have good credit is simple. A FICO score of between 670 and 799 is considered to be very good.
If you have a credit score in this range, you will just need to provide an ID, like a driver’s license or a passport. You may need proof of residence and information pertaining to the vehicle that you want to buy. This includes the make and model of the vehicle, the number of miles on the vehicle, and the value of the vehicle you are looking to use as a trade-in.
The advantage of getting a loan like this with good credit is that you have power. It is in your best interests to let lenders know that you are doing your due diligence and shopping around. This may encourage them to sweeten the deal by lowering the interest rate.
Getting a Same-Day Auto Loan With Bad Credit
The situation becomes more challenging if you are trying to get a same-day loan with bad credit. If your FICO score is under 630, you are going to face higher interest rates.
As of April 2019, according to Edmunds, the average APR on a new vehicle is 6.28% and 8.83% for a used vehicle. Keep in mind that if you have poor credit, you can expect to pay a higher interest rate.
For example, if your credit is between 501 and 600, you will pay an average of 13.35% APR for a new car, and you could find yourself paying up to 19.92% for a used car loan. If you have poor credit, you don’t have too many options except to pay a higher interest rate.
If you want to increase your chances of getting accepted for an instant auto loan, you could choose a vehicle that is less expensive. You could offer a huge down payment and present documentation proving that you have paid your bills on time for months or years.
How Do Auto Loans Get Instant Approval?
The Internet has changed the speed with which you can access information. This applies to auto loans as well.
Instant auto loan lenders have dedicated applications that are used for auto loans. They have online systems that allow them to review your information and to approve or deny loans in less than a day. In fact, this judgment usually takes a matter of a few minutes.
Although approval for instant loans comes quickly, you will still need time to fill out the loan application. Depending on how comprehensive the online form or application is, this could take a little time.
What Affects My Car Finance Terms?
There are three factors that will influence your car finance terms. The first is the amount of the car loan. If you have a trade-in or if you negotiate the price of the vehicle, you might walk away doing better.
The second factor is your interest rate. The higher your interest rate, the higher your monthly payment will be.
The third factor is the term of the loan. Your monthly loan payment is higher with a shorter term because you are paying off the balance in fewer months.
How Do You Get the Best Bad Credit Car Loans?
First, try to improve your credit. You can do this by paying your bills on time and reducing your debt.
Next, you need to provide a down payment. The more you can put down, the lower your interest rates will be and the better chance you have of your loan getting accepted.
Finally, shop around for the best loan. Some lenders are known for working with people who have less-than-stellar credit scores.
Can You Get Approved For a Car Loan With a 500 Credit Score?
It is possible to get a car loan with a credit score of 500, but you may have to pay higher interest. According to the Experian State of the Automotive Finance Market Report, you should expect to pay between 13.97% and 20.68% for a car loan with a credit score of 500.
Why Apply For an Instant Auto Loan With New Roads Auto Loans?
New Roads Auto Loans is an online lending company that you can trust. Along with our parent company, we have financed over a million vehicles. We are a real finance company that can help you get the quick loan approval you need for your next vehicle.
Buying a new car can be a complicated process. Getting financing can be even harder. However, if you work with the right lending company, the loan approval process can be made much easier.