An instant auto loan approval isn't impossible to get as a bad credit borrower, but it's typically easier to come by when you're in a good credit position. If you're struggling with credit and wondering about getting an instant approval, also called a pre-approval, you need to know where to start your journey, and what to expect along the way.
What Is an Instant Auto Loan Approval?
An instant approval usually leaves you waiting only hours, instead of days, to hear about a car loan decision. But, not every lender offers it and not every borrower qualifies for it, either.
When you get an instant approval auto loan, you do so with a direct lender, such as a bank, credit union, or online lender. Getting pre-approved essentially turns you into a cash buyer, which gives you negotiating power you may not have had otherwise.
Getting an Instant Car Loan Approval
Direct lenders that issue instant approval loans typically base car loan approvals on credit scores alone. Though each lender has their own requirements, you may start to run into problems if your credit score is below around 660 – which is the general cutoff point between good and bad credit.
However, if you're a member of a credit union, whose account is in good standing, you may have a fighting chance at a pre-approval. Because credit unions are member-owned, they tend to have a slightly less rigid requirements and also offer members a wide range of lending options. An online lender may also be more apt to work with a borrower whose credit score is somewhat shaky.
If you're able to get the instant approval you're looking for, you typically get a check or promissory note for the amount of your loan, which you can then use as a cash limit for your upcoming loan. A pre-approval allows you the freedom to go to any dealership or private seller that you choose.
You then repay your auto loan to the bank. Because you have a set amount of money to work with, you have more freedom to tailor your car buying experience. The total loan amount simply must fit within your borrowing limit.
What if I Don't Qualify for an Instant Approval?
If you don't qualify for an instant approval auto loan, don't worry. There are many lenders that work specifically with borrowers who are struggling through credit issues. These lenders are called subprime lenders, and they're third-party lenders who are signed up with special finance dealers, not banks or credit unions.
Subprime lenders are often referred to as bad credit lenders or indirect lenders, and you never actually sit with them in person to work out your loan details. Instead, a special finance manager at a dealership acts as your go-between.
Since you're primarily working with the dealer, you need to be prepared for your car loan as soon as you set foot in the showroom. If you're not ready right up front, you run the risk of having to make multiple trips to the dealership to get an auto loan deal done. You can avoid all the extra hassle by bringing a few documents with you when you start the process.
Generally, subprime lenders need you to bring in documentation which shows you have the stability, ability, and willingness to repay a car loan. This means providing your most recent 30 days of computer-generated pay stubs, utility bills or bank statements, and a phone bill in your name as proof that you can meet the lending requirements.
Though not necessarily needed in order to be approved, most bad credit lenders also require you to have a valid driver's license, provide personal references, and make a down payment of at least $1,000 or 10% of a vehicle's selling price.
Finding a Dealership for Your Next Car Loan
Though not everyone can qualify for an instant auto loan approval through a direct lender, many borrowers may find it easier to get the car loan they're looking for when they work with a subprime lender. These lenders aren't available everywhere, and searching when you don't know where to start can be frustrating. With Auto Credit Express on your side, it doesn't have to be.
We've been connecting borrowers in need with qualified dealers for over 20 years, and we want to help you find a local dealership to work with, too. The process is fast, free, and puts you under no obligation to buy, so what are you waiting for? Fill out our online auto loan request form today, and we'll get a move on making your match!