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Credit Card Applications » Questions » User Questions » Limited/Bad/Fair Credit » What is an Instant Approval Loan?

What is an Instant Approval Loan?

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Instant approval refers to the services that some banks provide by which loans are sanctioned instantly to applicants. These loans do not follow the regular procedure that loan sanctions follow before the applicant is granted the amount requested for. Instant Approval loans are basically emergency loans. Those facing an emergency, whatever it may be, rarely have the luxury of time to spend waiting for the paperwork to fall into place before the loan amount is sanctioned. In such situations, where money is required urgently, instant approval loans are the best option.

All banks and other financial agencies committed to the business of providing loan options have a mandatory approval check. This includes a very thorough scrutiny of the applicant`s credit history and financial status. The review of a person`s credit history may bring to light some less than favorable patterns with relation to repayment of loans and interest. This is particularly the case of those with bad credit scores. A bad credit score denotes irregular and late payments and an unstable financial status. Ordinarily, a bank will not consider a loan application submitted by someone who has a low credit score. For such persons loan approvals seldom come through.

Instant loan approvals are devised particularly for those stuck in emergency situations and unable to locate funds on account of an imperfect credit history. An instant loan approval also has the same considerations as ordinary loans, however, the bank or financial agency sanctions instant loans have worked out other ways of securing the money given out. The interest rates on instant approval loans are generally higher than the interest rates on ordinary loans. Furthermore, these loans function more as cash advances than as normal loans. Therefore, most people will resort to an instant approval loan only if they absolutely have to.

Instant approval loans resemble cash advances because they require the loan amount to be paid in a full installment at the start of the closest month. People who avail of these loans generally do so if some unexpected expenses crop up in the middle of the month and their salaries cannot accommodate it. The instant approval loan is therefore a short term arrangement and does not carry forth for extended periods of time. Therefore the chances of accumulating interest amounts are minimal. The high interest rate is a consequence of the speed at which the loan is approved. Some finance agencies approves loans in a matter of minutes.

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