Advantages of Using Pre Approved Car Loan

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Pre Approved Car Loan

A pre-approved car loan is a car loan that’s conditionally approved by a particular financial institution before you go to your preferred car dealership to purchase your new vehicle. This loan is conditionally approved since the lender will inquire about the car you’re buying and the exact amount you’re borrowing before completing the car loan paperwork.

Most car loan pre-approvals have a maximum approximate amount of money you’re allowed to borrow, and they will generally give you an idea of how you will service the loan. In order to get a pre-approved car loan, you’ll have to go through the typical loan application and approval process. Nowadays, you can quickly get a pre-approved auto loan and set up an automatic repayment schedule without ever leaving your house, although some institutions will need you to sign the loan paperwork before approval.

Advantages of Using Pre-Approved Car Loans

-Buyer flexibility: A pre-approved auto loan gives you the freedom of purchasing a vehicle almost anywhere. Since you already have the financing, you can easily shop around auto dealers like a cash buyer. Most pre-approved auto loan lenders only approve loans for cars that are purchased at franchised dealerships. Though, some lenders allow you to shop anywhere, be it a private seller or an independent dealership.

-More savings: A pre-approved car loan helps you to save money in two ways. First, it ensures that you to stick to your budget. When using a pre-approved car loan, you’ll know exactly just how much you’re ready to spend for the purchase. Since the financial institution gives you a set figure, this means that you cannot purchase a car that exceeds the pre-approved amount. Also, don’t forget that you’ll also be paying for other services in addition to the buying price, so make sure that you find a vehicle that costs less than the pre-approved amount.
Second, pre-approved loans allow you to compare interest rates. Getting your car loan request pre-approved doesn’t mean that you have the best rates in the market. Pre-approval gives you time to compare and settle for the best rates in the market. You can also assess if you’re settling for a good deal or not by comparing other loan aspects, including the repayment period and any extra fees. More extended repayment periods have higher rates than short ones. In most cases, the loan dealer will match their percentage to the rates offered by their competitors or offer you slightly lower ones. It’s up to you to decide whether you’ll accept it or not.
-More bargaining power: A pre-approved loan gives you more bargaining power. This means that you’ll be in a better position of negotiating for a better deal if you have a pre-approved car loan because it’s as good as cash. Since the financing is already in place, there’s no need to discuss down payment terms, trade-ins, monthly payments, and other loan terms. Instead, you can focus all your energy in getting a reasonable price for your new vehicle. Moreover, a pre-approved loan keeps you from incurring unnecessary costs, including warranties and any other additional services. The loan also helps you avoid any add-ons, thus spending less time in the dealership’s office.
-Reduced risk of failed loan approvals: Some dealers allow car buyers to take a car home even before the financing details are sorted out. These dealers then contact the buyers several days after purchasing the vehicle and say that the loan wasn’t approved. They will then give two alternatives, either making a bigger down payment or re-applying for the same loan with a higher interest rate. You can avoid all this trouble if you have a pre-approved loan.

Faster loan processing: Processing: a pre-approved auto loan is faster compared to other types of loan. This is because the financial institution responsible for offering you the loan already has your details, thus saving the amount of time spent in gathering personal information.

How Can One Get A Pre-Approved Car Loan?

You can get a pre-approved auto loan by applying for it at a lender’s website or visiting a credit union or a bank in person. It’s advisable that you apply for pre-approval loans from several lenders. This will allow you to compare the rates and terms before settling for the best deal. Once your car loan is pre-approved, you’ll find out the amount you qualify for, the terms, and the interest rate.

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