Fast Auto Loans and Fast Debt: Examining the Tradeoffs

Fast auto loans provide a way for borrowers to obtain an automobile loan a faster pace than a traditional car loan. This shortened loan processing means that you can be in a new or used car much sooner, in many cases the same day you make the purchase decision. This type of loan may be suitable for many borrowers but may also provide some potential pitfalls that you should consider.

Fast Auto Loans as a Gimmick

It is easy to come to believe that a fast auto loan sounds like some type of gimmick designed to induce you in taking out a loan with questionable terms or conditions. Many of the fast auto loans that are being provided are legitimate loans that contain the same terms that traditional auto loans have. The only difference is in the length of time that it takes for the loan to be processed and approval to be granted. Cutting the process down from days to hours makes applying for a fast auto loan beneficial to the consumer, as well as the seller.

Types of Fast Auto Loans

These loans can require you to provide some collateral or significant down payment in the case of a secured fast auto loan or simply provide a signature in the case of an unsecured loan. These loans may be more beneficial to individuals with low, poor or bad credit scores since the due diligence that is typically performed in a more thorough traditional auto loan is not as extensive. This may also present a problem for these individuals since the addition of debt may not be necessarily a good thing relative to their overall financial situation. This can further such person’s financial duress and lead to bankruptcy or other financial calamity.

Fast Auto Loan Interest Costs

Fast auto loans are going to be financed at rates that may be higher than comparable loan rates available in the market. This should be considered as the higher interest costs will add to a higher monthly payment and increase debt for the borrower. A borrower should also be cautioned to choose a fixed rate rather than a variable or adjustable rate loan. A fixed rate loan locks in the interest rate during the term of the loan while an adjustable or variable rate reacts to the prevailing market interest rate. This can result in a higher monthly payment and increasing debt over the time.

 


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