How Does a Same Day Car Loan Work?

The Borrower Submits an Application

In order to process a car loan application, the lender requires certain information from the prospective borrower. Lenders generally collect this information through an application form, though this form may be completed online, by phone, or in the car dealer's financing offices. Some basic information collected as part of the application includes name, social security number, address, phone number, employer, length of employment, income, and amount of other debts owed. Some lenders require additional information for more efficient processing.

The Lender Evaluates the Application

When the lender receives an application, the prospective borrower's information is fed into an automated evaluation system. While older, manual credit evaluation processes often took days to complete, technological advancements have reduced this requirement to a matter of hours. The automated system pulls the borrower's electronic credit file from a credit reporting bureau, verifies the application information against the credit file, evaluates the borrower's past payment performance and credit worthiness, then returns a credit decision.

The Dealer Completes the Transaction

When the lender's credit decision is returned, the dealer is notified of the decision; in some cases, the dealer may have entered the application information into the automated system and retrieved the decision himself. With the loan either approved or declined by the lending financial institution, the dealer may proceed with completing the sale or seek alternative financing for the buyer.