An instant auto loan can be a convenient way to finance a vehicle. The price of a new car is about $28,000 and even a good used car may cost $15,000. This means most people need financing assistance to purchase a vehicle. However, don’t let the convenience of an instant online auto loan allow you to make a hasty decision; carefully weigh the pros and cons of this type of loan before making your decision. For instance, you may be tempted by no down payment offers. However, if you can save money for a down payment, you’ll reduce the amount you have to borrow.
Establishing or Rebuilding Credit
Establishing or rebuilding credit will help you gain financial stability. If you don’t have credit established or your credit is less than perfect, paying higher fees and/or borrowing a smaller amount may be beneficial to you in the long run. As long as you’re sure you can make the monthly payments, an instant auto loan can be an opportunity to establish credit or make up for blemishes in your credit history. Before you finance a vehicle, make sure your income covers your living expenses. Calculate your monthly expenses and subtract them from your income. Then determine the additional amount you can afford to pay each month.
Making payments on time will improve your credit. If you want to purchase a home in the future, having good credit gives you buying power. If you meet the obligations of your auto loan, you’ll be able to build your assets by purchasing a home, and build equity in your home for retirement or to borrow against in an emergency.
Requirements for an Instant Loan
To get any auto loan, you must be at least 18 years of age. In most cases you’ll need steady income, or proof you’ll be able to make the monthly payments. Many lenders will require your social security number to check your credit status. We do request this on our secure application – it is just part how the industry works at the current time. If the loan is secured, property is required as collateral. The lender takes temporary legal ownership of the property until the loan is paid back. If the loan is unsecured, you may need a co-signer that agrees to pay off the loan on your behalf, if you become unable to make your payments.
Higher Interest and Fees
An instant car loan usually has higher fees and interest than other kinds of auto loans. Higher interest rates mean you pay more over time for the vehicle than it’s actually worth. If you get behind on your payments, the penalty fees are usually higher as well. Online auto loans may have quick and easy applications, but be sure you understand the terms before you enter the agreement; the agreement is a legal and binding document. Make sure you understand the agreement, and make sure you can make the monthly payments.
Instant auto financing, in general, can benefit those who need to establish or rebuild their credit; however, the interest rate and fees will most likely be higher than more traditional types of car loans. If you decide an instant auto loan is right for you, try to pay more than the required monthly payment each month. You’ll pay off the loan faster and pay less interest over the life of the loan. We also recommend that you provide a down payment, although can put you in touch with dealerships that offer auto loans with no down payment.