The approval time for a car loan depends heavily on how suitable your application is for that specific lender, and how complete your application is.
If your application is outside of a bank’s credit policy they may be slower to give you an answer which could ultimately be a rejection. Whereas with another lender you may have been approved within the hour!
But how do you know the right lender for you? In this article, we will discuss how long it takes for your car loan to be approved and how you can best navigate the car loan process.
In This Post:
Average Approval Time for a Car Loan
A car loan can be approved on the same day if it is thoroughly prepared and placed with the right lender. However, this is the exception rather than the norm.
Each lender will be subject to:
- The speed of their assessment process, and;
- The number of applications currently in the queue to be assessed.
Non-bank lenders rely heavily on technology in the assessment process and can often approve your car loan in 24 hours or less.
A traditional bank or credit union will often take longer, with 1 to 5 business days being the guidance provided.
Customer Case Study:
A same-day approval was achieved in this scenario for a customer who needed access to a vehicle as soon as possible.
The loan was sourced by our brokers at Gusto Finance, and the car through our sister dealership Gusto Auto.
Here is a summary of the timeline achieved:
- 9am: Initial inquiry received for a $13,000 car loan.
- 9:10am: Customer contacted by Gusto Finance by to conduct a preliminary assessment and discuss loan options.
- 10am: Complete loan application submitted to the lender.
- 10.30am: Decided on the car he wanted to purchase.
- 3pm: Application conditionally approved.
- 5pm: Loan settlement finalised!
- 5:30pm: Customer drove away in their new car – hours after the initial inquiry!
While this speedy outcome is not always achievable, it is certainly possible if you are well prepared and need a fast approval.
How to Speed Up Your Car Loan Approval?
The best way to speed up the car loan approval process is to limit any touchpoints that cause friction.
There are two critical elements to this:
- The customer is the right fit for the lender’s credit policy.
- The information provided in the application is complete and a decision can be made without further inquiry.
To achieve these two outcomes you need a broker on your side. They have industry knowledge that allows you to be matched with a suitable lender and will know what information is required (which does vary between lenders).
Click below to get in touch with our expert team and take that first step towards a fast loan approval.
Lender Policy
Most lenders specialise in serving a specific type of customer.
For example, a traditional bank may only lend to those with a stable job, good income, and a strong credit score.
Some non-bank lenders will consider those with a casual job, inconsistent income, and a poor credit score.
They will assess an application very differently and this will influence how an application is presented.
Application Requirements
At a basic level, all lenders will require the following but the form they accept and what the focus on will be very different:
- Proof of Income and Expenses – Bank statements or payslips.
- Credit History – A report from the various credit bureaus.
- Proof of ID – Usually 100 points of ID required.
- Employment Verification – Can sometimes be achieved with proof of income.
- Vehicle Details – Make, Model, Year, VIN and an encumbrance check.
If you would like more detail on the documentation required for a loan application then read this post.
Car Loan Application Process Summary
Below is a brief summary of the full car loan approval process. This will help you understand where the friction points can be.
While it may sound like a lot, we have successfully navigated this process in a matter of hours when all things are in order.
Step 1: Preliminary Assessment
A broker will gather all of the required information to determine what lenders are most suitable for your situation.
They will then present these options to you before progressing to a formal application.
The good news, is that by the end of this first step you have done most of the work required to get that speedy car loan approval.
You can kick off this step by submitting an inquiry below and our team will get to work for you.
Step 2: Submitting Your Application
Once you’ve chosen a suitable lender the broker will request any additional information that is required by that specific lender.
Your broker will also provide an explanation in advance of any issues that may be questioned in the assessment – and slow things down. For example, a default on an old phone bill you forgot about.
The broker will ensure every document is accurate and complete to avoid unnecessary back-and-forth with the lender.
It is then time to submit your application.
Step 3: The Lender’s Review
As discussed earlier, this is the part that is largely out of your hands.
However, our brokers have working relationships with a large number of lenders and if there are unique circumstances and an urgent assessment is needed we may be able to accelerate things through to the assessment team.
Once your application is at the front of the queue then it should be a short turnaround due to the completeness of the application preparation.
Step 4: Final Approval
If the lender is satisfied with the application they’ll issue the approval and issue loan contracts.
There may be conditions attached to the approval which would also need to be satisfied prior to releasing the funds.
As part of this, invoices for the vehicle purchase should also be provided to the lender. Your broker will take care of this step for you.
Step 5: Funds Released
Now the funds can be released by the lender to the dealership or other seller of the vehicle.
You are now ready to pick up your new car!
What Will Slow Down Your Application
The following things are the most common cause of delays in your car loan application.
Incomplete Documentation
Your broker will be unable to submit a full application until you have provided ALL of the requested paperwork.
You cannot send some of the documents so “they can get started.” It doesn’t work that way – an assessment requires all paperwork for submission.
Getting this all in as quickly as possible is going to be the biggest determining factor in the time it takes to approve your car loan.
Slow Communication of Issues
A lender will often have additional questions about your application and may request additional documents in some circumstances.
Make sure you are contactable by phone while you have a live application. Our brokers will relay these requests as soon as they are received.
By addressing any issues quickly you can ensure things are moving along.
Encumbrances on the Vehicle
If you are buying a car privately there are a number of checks that need to be done to ensure the vehicle is free of issues.
One of the more common issues to navigate is if the seller has an existing loan attached to the vehicle.
The lender will need to verify that this has been paid and removed as security against that loan before finalising your loan settlement.
This extra step can add time to the process.
Can a Broker Speed Up Car Loan Approval?
A broker will speed up car loan approval due to their intimate knowledge of the application process and the policies of the various lenders they deal with every day.
The existing relationships that our brokers have with the teams at each of the lenders can also accelerate processing times where there is an urgent reason to do so.
Get in touch with the Gusto team if you need a fast outcome today!
Conclusion
You can get a car loan approved in hours with the right preparation and some industry knowledge.
A same-day loan approval is possible when placed with the right lender.
It helps to have a skilled finance broker in your corner when you need to get to that car loan approval with urgency!
