How long does it take to get a car loan approved?

Getting a car loan can be anywhere from minutes to a few weeks. If you’re eager to hit the road, insight into how long it takes to get a car loan approved is your key. Understanding how several factors shape your application can help you come ready and prepared.  

Before you drive your dream car, check out this ultimate guide to your car loan application process.

How long does it take to get approved for a car loan?

To get a car loan, you need to understand how three factors influence how long the process can take – the application, approval, and loan funding. 

Application

The first step involves submitting an auto loan application to your preferred lenders. You can complete your application in person or online. Usually, this is the fastest stage in the process. In general, you may get this done in 10 minutes or less as long as you have the required documents. 

Approval

In some cases, lenders may respond immediately to your application. But the loan approval process may take some time. In some cases, other lenders offer same-day approval while others need a few days. If your lender offers preapproval, this also affects the turnaround time. 

Funding

Depending on your chosen lender and circumstance, you may typically get your car loan funds within one to three business days. Since all financial institutions vary in their processes, it’s always a good idea to talk with your lender. This will shine a light on your application process.

	Banks and credit union	Dealer financing	Online lender
Approval time	1 business day to a few weeks	Same day to a few business days	1 business day to a few business days
Funding time	1 business day to a week	Same day to a few business days	1 to 3 business days

Banks 

When you apply through a bank, you can either visit a branch or do it online. Approval time for a car loan varies depending on the lender. But in general, banks may take a day or more to process your application. Some of them also offer instant auto loans where you may get approved in an hour or less provided you meet certain criteria. 

Traditional banks are a great option since they often offer competitive car loan rates. But the catch is you typically need good credit to qualify. Other banks also have networks of dealerships where you can shop, so this may save you some time from searching for a car. 

Pros	Cons
Competitive interest rates Save time from shopping at dealerships Tend to have minimal fees	Stricter eligibility criteria Comparing can be time-consuming

Credit unions

Local or national credit unions are also a popular choice to get a loan for a used or new car. Since they are not-for-profits, you may usually get lower interest rates and minimal fees. Other than that, credit unions are more flexible with their requirements. So, even if you have less-than-perfect credit, they may consider your circumstance.

One thing you should consider though is you need to be a member to get a car loan from a credit union. Meaning you must meet the membership requirements first, which can add some time to your application. 

Pros	Cons
Lower interest rates Minimal fees More lenient requirements	Membership requirements May have limited branches

Online lenders

Online car loans are quick and convenient. This can be beneficial especially if you’re in a hurry to finance a vehicle. If you make an application during business hours, they may get back to you within the day. But overall, your application may take a day up to a week.

Online lenders may also offer better rates and lenient credit standards than traditional banks. With that said, they may be willing to work with you though you have poor credit. However, pay close attention to the rates and terms as they still depend on your financial standing.

Pros	Cons
Fast and convenient Competitive rates Flexible credit requirements	Need to verify unfamiliar online lenders Rates still depend on your creditworthiness

Dealerships

With dealer financing, dealers handle the process on your behalf. This means your dealer is responsible for your loan from application to funding. Once you choose your vehicle, the dealer then submits your application to their partner lenders. From there, you can compare and choose the best offer for you. 

Alternatively, some dealerships also have in-house financing. Through this, dealers directly offer you the loan instead of working with a bank or credit union. Simply put, you get your car loan from the same dealer – which is usually known as a “buy here, pay here” auto loan. With this, you may secure financing even if you have bad credit.

Even if dealerships are convenient, they are typically expensive. Say a lender offers you a 5% interest rate. Your dealer may mark up this rate to 7%. That way, they profit from the additional 2%. 

 

Pros	Cons
Streamlined process and convenience Potential promotional offers, like 0% APR More options even with bad credit	Higher interest rates and fees Potential add-ons Fewer lender options

Tips to get approved for a car loan faster

Getting a car loan varies among lenders. In general, banks and credit unions usually take some time to approve your application. Meanwhile, online lenders and dealerships are commonly faster. But if you want to speed up the process, you may take some steps to get loan approval sooner. 

1. Check your credit 

One thing that can save you time is checking your credit. Since lenders assess your creditworthiness, understanding your financial standing gives you a clearer picture of your eligibility. 

You can then pinpoint things you can do to improve your application – whether it be building your credit score, paying down other debts, etc. This also guides you in identifying lenders that suit your circumstance. Through this, you avoid going through the trouble of applying to lenders that are likely to reject your loan.

2. Submit all the required documents

Prepare the appropriate documents beforehand to dodge delays in your application. While they vary per lender, you typically need proof for your: 

• Identity: Be it your driver’s license, birth certificate, certificate of citizenship, passport, or any other state-issued ID. 
• Address: Your lease agreement, utility bills, or mortgage statements. 
• Income: Based on your employment status, you may need to provide your pay stubs, bank statements, W-2s, tax returns, etc. If you’re self-employed, you need to show any proof of income or benefits. 
• Employment: Sometimes, you may need your employer’s contact information for verification. 

Some lenders may also have certain car restrictions. Say you plan to buy a used car; lenders may need the vehicle’s information, like its mileage and original title. Remember, your application can get pushed back if you miss one document, so see to it you submit all the requirements.

Check your application for any errors. If anything seems off with your application, lenders may send it back for corrections. With that in mind, double-check your application before submitting it.

3. Consider getting preapproved

Note that prequalification and preapproval are different from one another. On one hand, getting prequalified gives you a rough estimate of what you may qualify for. This also won’t affect your credit score because lenders only do soft credit checks. 

On the other, getting preapproved for a car loan means your lender conditionally approves your application provided your financial situation doesn’t change much. Meaning preapproval briefly impacts your score since lenders do hard credit checks.

Getting preapproved is a great idea especially if you’re a serious buyer. Even if it causes a temporary dip in your credit score, it gives you a starting point to negotiate car prices.

While not all lenders provide preapproval, aim to get preapproved with multiple lenders to compare rates. But make sure you do this within a 14-day period so that they only count as one hard pull.

4. Don’t apply late in the day

Some lenders have same-day approval, so see to it that you avoid taking out a loan outside of regular business hours. Submitting your application past business hours means you need to wait until lenders are open again before you get a response. This then adds some time to your application process.

With that, try to apply for a car loan during business hours. This ensures lenders can promptly review and respond to your request. This way, you maximize the likelihood of a quicker approval process.

Factors to consider when getting a car loan

Just because the car loan approval process is fast doesn’t mean it’s the best. Keep in mind that you also have to compare other aspects to obtain the best deal. 

Annual percentage rate

Your annual percentage rate (APR) takes into account the interest and other fees. That said, the higher the APR, the more expensive your car loan is. To get a lower APR, having a high credit score can help you. 

Fees

Also, compare the associated fees that may add to the overall cost of your loan. Some of them may include origination fees, prepayment penalties, dealer fees, etc. Make sure you check with lenders about the added fees to better compare your choices. 

Loan term

Ensure you pay close attention to your loan term, too. Note that long loan terms have smaller monthly payments but higher overall interest. Meanwhile, short loan terms have higher monthly payments, but you can save more on interest charges.  

Down payment

A down payment is an upfront cost when buying a car. In some cases, lenders require a down payment while others don’t. Typically, the more down payment you have, the less interest you pay. So, in general, lenders recommend a 20% down payment to lower your loan costs. 

Car requirements

Certain lenders have restrictions on which cars they may fund. Before deciding on a lender, check if your desired car meets their criteria. 

Taxes

You also have to pay sales tax when you buy a car no matter which lender you choose. This is non-negotiable and depends on the state. 

What is the minimum credit score to buy a car?

All lenders have their own set of criteria when evaluating your application. But in general, a high credit score means you may qualify for lower interest rates and fees. 

Even if there’s no minimum credit score set in stone, a score of at least 600 can help you get a reasonable car loan. Nonetheless, a lower credit score won’t keep you from qualifying for an auto loan. But it may come with a higher rate and monthly payment. 

Let’s say your credit score is around 815. Since this is considered excellent, lenders may provide you with a 4.75% interest rate. Otherwise, they may give you an 8.15% interest rate for the same loan if your credit score is 610.

Bottom line

Quickly getting approved for a loan can make your car-buying process simpler. Things like checking your credit, submitting all the requirements, and getting preapproved can help you avoid frustrating delays and ensure faster loan approval. So, take time to absorb how different lenders process your application, so you can get behind the wheel sooner. 

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Frequently asked questions