The length of time it takes for a secured loan to be processed and for you to receive your finance all depends on the type of loan you are applying for.
Mortgages can take three or four weeks to process from start to finish. These are relatively large loans, involving lots of paperwork, that can take time to fill in and process. The exact length of time will depend on how long it takes you to complete the application, and on your individual circumstances.
Other types of secured loan, such as homeowner loans (also known as a second charge mortgages), can also take several weeks to acquire due to the sizeable amounts of money involved.
If you are looking to buy a car with a loan, then car finance is a way of getting behind the wheel with less risk. Car finance arrangements such as hire purchase (HP) and personal contract purchase (PCP) usually take just a day or two to process once an application has been submitted, but you can be approved in principle in just a few minutes.
When it comes to car finance, the secured loan label can be confusing. Traditional car finance agreements, such as HP and PCP, share similarities with secured loans, and are often referred to as such, but are neither secured nor unsecured. The confusion arises because there is an asset at risk with PCP or HP if you can’t keep up repayments.
A car loan is a type of car finance that allows you to buy a vehicle outright. It is an unsecured personal loan (UPL), meaning that – unlike HP and PCP – there is no asset secured against it. You borrow a lump sum and use it to buy the car upfront. You then make monthly payments over a prearranged timeframe until the loan is repaid. Typically, it can take between one and five days for funds to reach you after making an application for a personal loan.
As with any big financial outlay, be sure you understand the differences between the various car finance options available, so you can make the best choice for your circumstances.
It’s also helpful to be aware that the timescales involved will depend on the type of car finance you choose. A hire purchase agreement may take a bit longer to get over the line than an unsecured loan, for example. This is because the agreement is only finalised when the car is selected and linked to your contract. With an unsecured car finance product, the agreement is not dependent on a you choosing a car at that stage and so will invariably shorten the lifecycle of the application.
The applying for car finance bit is quick and easy. Simply fill in an online form to find out in minutes whether you have the green light to make a full application and to receive your personalised quote. Then you are all set to make an official application for finance. You’ll need to supply photo ID, proof of address, income and desired loan amount alongside a few other personal details. Filling in the actual form itself shouldn’t take long provided you have all the relevant details to hand. Once everything’s been submitted, you can expect to receive a decision – and hopefully your finance – within a day or two, sometimes sooner.
What might delay an application?
Of course, because part of the car finance process involves choosing a car, there may be a gap between your initial application for a quote, and the making of a full application. But once you have found your dream car and you are all ready to purchase, the process is quick.
A decision may be delayed if there are errors in the application, if you are self-employed or unemployed and need to submit further documentation, or if there are gaps in your credit file.
But there are things you can do to help the application process progress as smoothly as possible.
Do your research well before you reach the application stage! Make sure your finances are in good shape and that you are in control of your debts. Be certain about your choice of car finance product and how much you can afford to borrow. Ensure that all the documents you need are readily available and up to date. And always check your application carefully for mistakes before you click ‘send’.
How much is a car on finance in the UK?
