Instant Approval Personal Loans

After flooding the television, radio, and Internet marketing arenas with myriad promises, instant approval personal loans have gained attention among cash-strapped consumers and businesses. Promising nearly instant funding and flexible repayment options, personal loans with instant approval promise to be an attractive option for quick financing.

Function

Instant approval personal loans are similar to other personal loans: Borrowers approach the financial institution through a variety of channels, either online, by phone or in person. When an application is completed, an automated process checks the borrower's credit file, evaluates several credit factors and returns an automated decision on the fate of the loan. If the checked factors appear favorable and the loan is approved, it is funded by the lending institution and the borrower can use the money immediately. If the automated process returns a decline message, the loan process either stops or is referred to a financial specialist for further review.

Factors

The automated scripts used for evaluating credit worthiness vary from institution to institution, but some factors are commonly evaluated by almost all lenders. The borrower's overall credit score, known by terms like FICO or Beacon, is one of the most important factors, and is considered alongside the borrower's debt-to-income ratio. Other important factors may be the number of recent late payments, any public records like judgments or bankruptcies, and utilization percentages on revolving credit lines.

Time Frame

Thanks to automated processing and instantly available credit reporting, "instant approval" personal loans are truly processed almost instantaneously. Aside from the fraction of loans deferred to specialists for manual evaluation, instant approval personal loans can be approved in as little as a few seconds to 1 minute. Funding of the loan may require a little additional time, though, and transferring of funds to a bank account through the Automated Clearing House (ACH) system can take 2 to 3 business days.

Benefits

Thanks to quick turnaround and a nearly instantaneous decision, instant approval personal loans allow borrowers to quickly and easily obtain necessary funds. Businesses can use these funds to meet payroll requirements, finance additional inventory or purchase supplies. Consumers can obtain quick financing to pay outstanding bills, finance an upcoming vacation or cover unexpected expenses. Additionally, the instant credit decision allows consumers to quickly and easily determine whether further loan shopping is necessary.

Considerations

Like any financial obligation, instant approval personal loans should be approached with caution. Despite the convenience of instant credit decisions, these loans are serious financial obligations and must be repaid over time even if the purchase they financed was made on a whim. Careful attention should also be paid to the terms of the loan, especially the interest rate and time allowed for repayment. With proper evaluation and due diligence, instant approval personal loans can be an effective and useful financial tool.