How To Get An Instant Auto Loan Approval With Bad Credit?
Timing becomes a crucial factor when you need to pay for urgent vehicle repairs or buy a new car. Applying for an instant auto loan with bad credit can be challenging, but there are ways to improve your chances of success.
Today, we’ll take a closer look at an instant loan and outline some strategies you can use to boost your likelihood of qualifying for one.
What Is Instant Auto Loan Approval?
Immediate approval is one of the best features of the modern lending industry. Many online credit providers offer speedy turnaround times. If you require rapid funding, you’ll find that the application process usually relies on an instant credit check.
- You can expect your lending provider to do a soft check when you apply for a lending product. Additionally, you can expect possibly a hard pull if you choose to accept the APR and terms it offers
- Considering the extensive documentation that some lenders require before they approve loans, it’s easy to see why getting instant approval will require you to have a good score. This rating is your lending product provider’s only guarantee that you’ll repay your debt
What Credit Score Is Required To Qualify?
Instant loans are an example of unsecured lending. This implies that your repayments are backed solely by your promise to pay them. When your lender enters into this kind of good faith agreement, the company will want to know that you’ve been a reliable credit customer in the past. The quickest way to ascertain this is by checking your rating and financial history.
- Every lender has its criteria for approving applications, and there’s no specific score that’ll guarantee you get accepted. However, a good rule of thumb is to make sure that your FICO score is above 660. This is the average minimum creditworthiness requirement across the industry
- If your score is significantly lower than this, there’s no need to give up hope of being approved for an instant lending product. By taking measures to improve your numbers (like paying your installments on time each month and reducing your account balances), you can increase your approval chances. Alternatively, you could explore the various types of lenders in the market and find one that caters to your needs
Where Can I Get An Instant Approval Loan?
The vast number of companies in the lending industry can make it challenging to know which provider to pursue. You’ll want to avoid multiple rejected applications, which can further lower your score. Start by considering lenders from these three categories:
- Banks: Large financial institutions have decades of experience in the lending industry and provide various lending products with instant approval. However, they also tend to have the strictest approval criteria of any provider. Thus, a bad rating could make it challenging to secure the funding you need
- Credit unions: These organizations are similar to banks but with one significant difference: they operate on a membership basis and are highly motivated to provide their customers with the right financial products. If your score has prevented you from getting a bank loan, you may want to consider your local union as an alternative
- Online providers: Like unions, online loan companies feature more flexible lending terms than banks. They’re incredibly open to serving customers with low ratings. Another advantage of applying for a bad credit loan is that these companies tend to offer a fully online application process
Alternatives To Consider
If you’re unable to obtain an instant vehicle loan, there are several alternative sources of funding that you’ll want to consider.
- HELOCs: A home equity line of credit is a financing product that’ll allow you to borrow against the amount of capital you’ve already repaid on your mortgage to pay for the cost of buying or repairing a vehicle
- Dealer financing: You may be able to obtain a vehicle loan through your dealer. It’s essential to check the down payment requirement and APR associated with it to ensure that your monthly car installments will be affordable
- Use your savings: You may want to withdraw some money from your savings fund to help pay for your new car. However, you’ll want to ensure that you refund your savings over time so that you can maintain an emergency cash reserve of at least three to six months worth of expenses
The Bottom Line
An instant auto loan could give you fast access to the cash you need to buy a new car or pay for vehicle repairs. While bad credit can be an obstacle to obtaining this type of financing, it’s possible to qualify if you apply with the right lender and take steps to improve your FICO score.
Accordingly, a bad credit personal loan could be the ideal lending product for new vehicle buyers with less than stellar financial histories.