The High Price of Instant Auto Loans


Defined Tag: Instant Auto Loan.

Bad Credit? No problem! No credit? No problem! 100% guaranteed approved! Do these phrases sound familiar? To many people they do. These are the catch phrases of the instant auto loan business. A quick internet search will illustrate the seemingly countless number of loan companies out there that are willing to forgive, forget, and look past one’s financial mistakes. The consumer should be aware, however, as these companies who present themselves as a forgiving and grace motivated friend, are propelled by the same green substance the propels every other financial industry in the world, money.

These auto lenders are not piranhas or vultures or even a lion stalking his pray to see who he can devour. Many of them are honest, upstanding establishments with long histories in the industry. The important thing to bear in mind is that no financial institution is going to take on a financial risk without accounting for equal collateral. In loan terms this equal collateral turns out to be three items: high interest, a co-signer, and material collateral. The last two are things that many people have to deal with from where ever they are getting their auto loan. It is high interest that is the killer. A typical auto loan, for a person in good credit standing, would range from 5.75% to 7.00% for a new car and just a few percentage points higher for a used one. One who agrees to an auto loan from an instant auto loan establishment will find himself paying four to five times that.

Instant auto loan businesses serve their purpose and to many they are the only way to obtain a reliable mode of transportation. They are not by nature evil or scavengers, but their no credit, no problem attitude comes at a price, a price the consumer is left to pay for.