Are Instant Auto Loans Worth The Price?
Doug Smith

Defined Tag: Instant Auto Loan.

Many of the TV commercials seen these days are selling the concept of the instant auto loan. These television lenders claim that bad credit is not a problem. Even the total lack of credit is not a concern. Why, they'll approve 100 percent of instant car loan applicants regardless of their credit history and financial background. While these lending companies claim to offer fast car loans because they want to be your friend, remember that they are out to make a profit in the process.

This does not mean that instant car lenders are dishonest. Most of them are honest and reputable lenders trying to build their business. As they advertise their quick car loan products, however, they want to emphasize the benefits, such as taking on bad credit or no credit borrowers, and their high approval rates. You cannot blame them for that! These instant loan companies are merely stating what their service can do. However, there may be some disclaimers and fine print associated with these instant auto money lenders.

As a wise consumer, you must understand that instant vehicle loan companies are offering a service to bad credit borrowers that mainstream banks and credit unions do not. These poor credit car loans come with higher risk of not being repaid, however, and are likely to cost more than a traditional new car loan.

To minimize that extra financial risk, the instant auto lender uses three tools. The first is the interest rate. The annual percentage rate (APR) on fast vehicle loans is likely to be higher, so hat the lender can get more of their money back fast. A co-signer may also be required, as well as offering the lender collateral such as property or other belongings. The co-signer agrees to pay off the loan in the event that the primary instant car loan borrower cannot. The collateral is something the bank can seize and sell in the event that the borrower is unable to repay the loan. The latter two things may be required on any loan, but the higher interest rate can potentially substantially increase the cost of the instant new car loan.

A good credit borrower might incur a 5% tot 7% interest rate on a used car, and maybe 6% to 9% on a new vehicle purchase. The instant vehicle loan provider might charge double, triple, or even four times those rates! Therefore is literally pays to get instant auto loan quotes from several lenders to find the lowest APR for your new car purchase.

Copyright 2008 by Doug Smith. All Rights Reserved Worldwide. Unauthorized Duplication Prohibited.