Things to Know About Pre-approved Car Loans

What is a Pre-approved Car Loan?

A pre-approved car loan is a good sign of approval from a lender that you are qualified to tender an application for a car loan. A pre-approval also comes with terms like the amount you can apply for, interest rate and loan term based on the lender’s evaluation of your creditworthiness. This would give you a feel of the total cost of the loan and aid your budgeting before you actually start looking around for a car.

A pre-approved car loan shows dealers that you are committed and ready to make the purchase. In addition, there is no need to request for in-house financing which practically gives you some leverage when negotiating with the dealer. No matter what you’ve read about the pre-approval car loan process, getting pre-approved for it is actually simple and easy if you have a good credit rating and the required documents.

Benefits of Getting Pre-Approved for a Car Loan

Getting pre-approved for a car loan can be beneficial in many ways. Here are a few reasons why you should consider getting pre-approved for a car loan.

Expectations

It allows you to know exactly how much your car loan will cost you and how much you can borrow. It will also help you work on your budget and plan ahead accordingly, avoiding any surprises when you’re making the purchase.

Time

It helps you save time and energy in searching for the right car for you and your budget. Instead of going around asking different dealers about their financing options, you can just wait for your pre-approval letter and go ahead with your purchase. 

Confidence

It gives you a good feeling of security when you are negotiating with a dealer. It also allows you to make a better decision on what car to buy and what interest rate you should pay. In contrast, you might end up paying too much for the car or settling for a loan with a high interest rate.

Negotiation

It gives you some bargaining power when negotiating with the dealer as you will be armed with a good knowledge of the car you want to buy and the best loan option for you. This gives you the leverage to negotiate for a better deal.

Decision-Making

It helps you make a better decision on what car to buy and the loan you want to take. You can also decide whether you want to go for a loan with a lower interest rate or a loan with a higher interest rate but with a longer loan term.

Conclusion

From the foregoing, it is clear that a pre-approval will greatly aid your car purchase experience. You can walk into the dealership knowing the price range of the car you want without falling for vendor tactics. Therefore, planning before taking action would benefit you in the end.