Why does it take a few hours to finance a $100k auto loan, but 30+ days to finance a $100k mortgage?
In: Economics
When you finance a car, you pretty much have to be rich enough they lender can easily get their money back without relying on the car as collateral. Car’s get wrecked or stolen, and their value depreciates quickly. The bar is higher to get a loan, and since you can almost always get a cheaper car, it is not worth the effort to jump through a lot of hoops to work the system, easier to just say “no, get something different”. Especially with a $100K car.
Also, sometimes the car loan does take a few days. The dealer lets you take the car anyway, with stipulations in the contract that you have to give it back and pay various fees if the loan doesn’t go through.
With a house, it is completely different. Many people who buy a house can barely afford it and are borrowing right on the margins of what they can qualify for. The house serves as collateral, which extends borrowing power, but every house is different and has to be inspected and appraised. On top of that, you have tax breaks, government projects, and a wide variety of loan products to choose from, there are a lot of moving parts, and choosing the right combination can be the difference in qualifying or not.
Finally, comparing a $100K car loan and a $100K home loan is completely specious. If you are trying to buy a $100K, you are pretty rich and the bank knows if push comes to shove, they can squeeze that money out of you. $100K is a pretty cheap house, if that is all you can afford, $100K is a lot of money to you, so the lender needs to be a lot more careful about how they are going to get that money back.
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