If you landed here in search of a loan to buy a “fast car,” we are sorry to disappoint you: that is not what a “fast auto loan” is all about.
Instead, we will instead walk you through how these quick loans can help out when you are in pinch, faced with an unexpected debt you cannot cover with savings.
What is a Fast Auto Loan?
Fast auto loans allow borrowers to speed up the process of securing funds by bypassing traditional loan applications (which can take weeks to approve with lenders) and instead provide a lien-free title to an automobile as collateral for a short-term loan.
There are also a few other important steps for this car loan, such as presenting a valid driver’s license to confirm your age and presenting your vehicle for inspection.
This inspection will ultimately determine the value of your car and the value of your loan. Whereas a 1985 Dodge Dart is probably not going to yield a great amount of money in terms of a loan, a newer car in decent shape should.
These kinds of loans are used all the time to help with unexpected circumstances, and in the right scenarios, they can be effective and incredibly useful. They can also be problematic if borrowers do not understand the terms and the fine print, so we will also give you some tips on what to look out for with fast auto loans.
Will Bad Credit Stop Me from Getting Approved for a Fast Auto Loan?
One of the reasons fast auto loans are so popular is the fact that borrowers can be approved for them even with a bad credit history.
A bad credit history (or no credit history) prevents many people from receiving different types of bank loans, which can be incredibly frustrating when you need a loan to cover sudden and unexpected expenses.
It is important to understand a bad credit score can happen to absolutely anyone, even if you have for years maintained a good credit score.
Sudden changes in our lives, such as layoffs, illnesses, divorces, or other difficult circumstances, can change one’s financial situation seemingly overnight.
A suddenly maxed-out credit card to pay for a car repair could shave points off your score; a missed house payment after a job loss could ding your score, too.
Fast auto loans are not contingent upon these scores; better still, fast auto loans in default are not reported to credit agencies. Taking out a fast auto loan will not harm your credit score.
Fast Auto Loans: How to Apply
One of the best things about fast auto loans is how easy the process is in terms of applying. Many consumers are easily overwhelmed by a traditional loan process and all that it requires, but a fast auto loan is simple enough for almost anyone to manage.
If you have a vehicle in good condition and a valid driver’s license, you are in business. Most lenders will have an online process for the simple application, and you then set a time to take your vehicle in for inspection.
One important point to remember before you apply is that your car title must be lien-free.
What is a Lien on a Car Title?
If there is a lien on your car, this simply means that you are still paying someone else for it.
In other words, you have not paid off the car in full, which means you still make a monthly payment to a lender who helped you secure the automobile in the first place. This could be a bank loan or an auto financing loan you got through the dealership.
Fast auto loans are for people who own their cars free and clear. In other words, in a fast auto loan scenario, the title to the car is yours with no other parties involved.
What Types of Situations Cause Borrowers to Apply for a Fast Auto Loan?
Any borrower should proceed with caution when applying for loans, no matter what type they are. A fast auto loan works quickly (which is why it is so appealing in an emergency) but you should still exhaust other options first.
For example, if your sudden and unexpected expense could be covered by savings, an interest-free short-term loan from a family member, or even a salary advance (without penalty) from your employer, you should give serious thought to using one of those methods to resolve your financial crisis.
If there is no other option, a fast auto loan can be a helpful way to cover a sudden medical debt, unforeseen home repairs, or other similar scenarios. Borrowers should have a plan in mind for how they will repay the loan to avoid losing their cars, which would simply mean trading one headache for another.
Things to Look Out For With Fast Auto Loans
Before you sign the dotted line, be sure you understand every bit of the “fine print” from the lender. This is true for any kind of loan and not just fast auto loans.
Here are a few items to consider that are specific to fast auto loans:
- The payback time is short; you will likely need to pay off the loan in 30 days, so before agreeing to it you must have a solid plan in mind for how you will do that.
- If you do not pay the loan back, you are going to lose your car. This is how fast auto loans work, and thinking you might be able to “get a little extra time” is both dangerous and naïve. Know upfront that you are absolutely risking the loss of your vehicle.
- Fast auto loans have much higher interest than some alternatives you may want to explore, such as a credit card advance or even payday loans from a credit union.