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Instant Approval Auto Loans

Many car dealers and lenders advertise instant approval auto loans. Instant approval auto loans are loans that the dealer can approve or deny almost instantly. The advantage to these loans is that a person can know instantly whether they can get the vehicle or not.

The dealer is able to do this because the instant approval auto loans approval process is based on a simple formula. Sometimes the auto loan is based upon the applicant’s credit rating, and sometimes it is based upon the applicant’s income.

Many instant approval auto loans are approved based upon a person’s ability to pay them. The lender bases the approval process upon income verification. The applicant has to prove that they have the income needed to pay off the loan. 

How Instant Approval Auto Loans Work 

The way instant approval auto loans work is quite simple. If the loan approval process is based upon a person’s credit rating the dealer uses the internet to run a credit report. If a person has a credit history it is usually possible to get an instant credit report on them from the internet.

If the instant approval auto loan approval process is based upon income verification the dealer checks to see if the person has the income to pay the loan. Many auto loans for people with bad credit use an income verification process.

Generally, in such a process the lender may check the buyer’s bank to see if they have the money or contact the buyer’s employee to see if they have a job. In many cases the lender will simply look at the buyer’s bank statements to see if the money is being deposited into the bank.

Drawbacks and Advantages to Instant Approval Auto Loans

The biggest advantage to instant approval auto loans is that a person can know if they have been approved for a car loan almost instantly. This means a person can make a quick decision whether to purchase the car or not.

The drawback to this process is that the buyer can make a quick decision without shopping around for an auto loan. The buyer might get stuck with a loan with a high interest rate and unfavorable terms. Many people end up with loans that are too expensive because of instant approval auto loans.

Salesmen in particular will try to talk buyers into buying a car quickly during the instant approval auto loan process. One common trick is to say that the vehicle the buyer wants will go quickly and won’t be available so the buyer has to make a quick decision.

The salesman wants you to make a quick decision because he gets a commission if you buy. Remember the sales person only gets paid if you buy the vehicle so he or she has an incentive to convince you to make a quick purchase.

Instant Approval Auto Loans Can Be Expensive

It is often cheaper to get an auto loan from another source such as an internet lender or a credit union than to use an instant approval auto loan from a dealer. One good way to avoid being talked into getting an instant approval auto loan is to get approved for an auto loan before you go car shopping.

Having a loan approved can help you avoid getting talked into an auto loan that is too expensive. It can also enable a person to negotiate a better deal on a car purchase.