Instant Auto Loans: Disadvantages

At first glance, you might think instant auto loans are always the way to go when you want to buy a new car right away. The quick auto loan approval process and convenience of these fast auto loans can be tempting, but this auto loan process isn't always the best. Before submitting your instant auto loan application to a car loan lender, you should take these disadvantages into account to decide if an instant auto loan really is the best kind of loan for you.

In order to provide the fastest approval possible, instant auto loans are based on less information than a regular loan. If your history is such that you would be benefited by personally explaining your situation or by providing as much information as possible, you will likely be able to get better car loan offers with a more in-depth and less rapid loan approval process.

Because instant car loans are based on less information than regular loans, they can represent a higher risk to the lender. This may cause higher interest rates to be charged on instant car loans than would be charged on a similar, non-instant loan.

For the same higher-risk reason described in Disadvantage 2, penalty fees and other additional fees for instant car loans may be higher than they would be otherwise. Therefore, you could save money on your loan by simply being patient and applying for a non-instant car loan.

There's always a slight risk factor to submitting personal information through the Internet. If you apply online for an instant auto loan, you run the risk of identity theft if someone has found a way around a website's security system. While this risk is very small, it is still worth noting. Also, many online-only lenders claiming to be legitimate loan sources are actually just trying to get your personal information. If you can't verify the validity of a website which is asking for your information, you should stay away. In-person, non-instant applications make identity theft a non-issue.

The main advantage of an instant car loan is that the approval process is faster than other loans. Instant car loans can be approved in a few hours, but usually non-instant loans can be approved in less than 24 hours. Since buying a car shouldn't be a spur of the moment decision anyway, you should have plenty of time to apply for a non-instant loan before committing to a purchase. This makes instant car loans seem fairly silly unless they are for emergency purposes.

Instant car loans offer speedy approval, but this isn't an impressive benefit when the disadvantages are taken into consideration, especially considering that regular loans also have reasonably quick approval times. Unless you're faced with an emergency, you may be able to save money by having the patience to stick with a regular loan.