Instant Car Loan Approval Offers: What's the Catch?

Instant car loan approval offers are often called pre-approved loans. The lender promises to approve any applicant for the loan, but the main catch is how much the lender will charge. 

High Interest Rates

The lender will issue your loan based on a minimum number of criteria. You will have to submit only your information for a credit check in order to get approved. The lender will typically approve loans for bad credit borrowers, but the catch will be a very high interest rate. Even good credit borrowers will have higher rates on an instant loan. The lender is capitalizing on your haste by assuming you will not shop around for a more competitive rate. 

Unfavorable Loan Terms

The lender will typically also offer unfavorable terms. Even with the high rate, you may be expected to make high monthly payments and pay off the loan within a matter of 2 or 3 years. With a traditional lender, like a bank or dealer, a high interest rate would only be charged on a longer loan. Basically, you sacrifice the ability to negotiate this point in exchange for the very fast funding you can receive. As such, this option is best for bad credit borrowers who will not get favorable terms at a traditional lender.