Fast Auto Loans: What's the Catch?

Guaranteed, pre-approved and other forms of fast auto loans are very convenient for borrowers in need of quick financing. However, as with most types of flexible loans, you will pay for the convenience offered through these options. The three main costs will be higher interest rates, less favorable terms and costly fees.

  • High interest rates with these loans are common because the lenders know you, the borrower, are not interested in shopping around. In fact, most people who opt for fast auto loans do not have other options due to a poor credit history. Those with solid credit typically opt for the less costly traditional options.
  • Unfavorable loan terms mean you will not be able to modify this loan easily in the future. If you do need to alter the loan, you will have a degree of difficulty in getting the lender to agree, and you will be assessed a high prepayment or modification fee. 
  • Other fees associated with these fast auto loans include unusually high fees for late payments and origination of the loan. While all lenders will charge origination fees, fast loan lenders do very little to earn this payment. Late fees on these fast auto loans will be enforced with relatively no grace period.
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