Why You Should Get Pre-Approved Before Shopping for a Car
You might find yourself needing to find a new car and scouring the Internet for ‘guaranteed credit approval car dealerships near me’ in hopes of finding someone who will work with your credit. We get it—we’ve been there! But before you start shopping for your new ride, there is one critical step that can save you time, money, and stress: getting pre-approved for an auto loan.
Why should you secure pre-approval? How wise of a move is this when you are considering buying a new vehicle? Grab a cup of coffee, have a seat, and prepare to learn about how pre-approval can be a real game-changer when it comes to buying a car.
Before we dive into the benefits of getting pre-approved for an auto loan, it is important that you understand what pre-approval is and how it differs from other types of financing.
Pre-Approval and Pre-Qualification
Pre-approval is a process in which a lender reviews the financial information you submit—including your credit history—to determine the maximum amount they are comfortable lending you for an auto purchase. This gives you an idea of what your budget will be before you visit a dealership. Remember, pre-approval does not force you to take the loan. It is merely an offer from the lender, giving you the option to select their terms and the conditions under which they’re willing to lend you money.
Pre-qualification is a little different than pre-approval. This less formal process involves a lender estimating how much you might be able to borrow based on your financial information. It is the very first step of the loan process and doesn’t involve an in-depth examination of your credit history. On the other hand, pre-approval is more intensive and results in a more accurate loan offer.
Knowing Your Budget Saves You Time at the Dealership
A major benefit of getting pre-approved for an auto loan is that it establishes a clear outline for your budget. Knowing how much you can afford to borrow and what your monthly payments will be helps you avoid falling in love with a vehicle that is out of your price range and saves you from disappointed expectations.
Buying a car can be a time-consuming process. Without pre-approval, you could spend hours negotiating your price and filling out loan applications at a dealership. When you are pre-approved, the process gets streamlined since you already have your finances sorted. This allows you to focus on test driving and selecting the right vehicle for you.
Better Interest Rates and More Peace of Mind
Interest rates can have a serious impact on the total cost of your loan. When you get pre-approved, you can shop around for the best interest rates. This might save you a lot of money over the life of your loan. Securing pre-approval puts you in a better position to comprehend the factors affecting your interest rate and, if necessary, make improvements.
Knowing you’re pre-approved provides peace of mind during the buying process. You can confidently explore your options, knowing you are financially backed when you find the vehicle you’d like to buy.
Check Your Credit Score and Gather Up Your Required Documents
It is a smart idea to review your credit score and credit report before you start the pre-approval process. A good credit score can lead to better loan terms with lower interest rates. Not all dealerships offer guaranteed credit approval, so if you go to a dealer who doesn’t offer this benefit, there are some steps you can take to boost your credit score.
Lenders will request various documents so they can assess your financial situation. These documents may include:
· Proof of income (pay stubs, W-2s, tax returns)
· Proof of residence (utility bills, lease agreement)
· Identification (driver’s license, passport)
· Social Security number
· Employment information
· List of monthly expenses
Have these documents ready to expedite the pre-approval process.
Shop for Lenders Before Completing the Application
Do your research on local lenders and financial institutions to find the most competitive rates and terms. Check into online lenders as well. It’s important to ensure that the lenders you consider offer options for pre-approval. Select a lender and complete their pre-approval application. It will ask for personal and financial information, not to mention details about the car you intend to buy.
Review and Accept the Offer, Then Start Shopping Around
Once the lender reviews your application and credit history, they will give you a pre-approval offer. Review it carefully. Take note of the interest rate, loan term, and additional fees. Accept it if you’re satisfied. If not, keep searching!
With your pre-approval in hand, you can confidently start shopping for your next car. Whether you’re looking for a new or used vehicle, having pre-approval simplifies the process and allows you to focus on finding the perfect car.
Guaranteed Credit Approval
Here at Faith’s Automotive, we offer Guaranteed Credit Approval—one of the many benefits of shopping with us! Bad credit? No credit at all? If your credit is less than stellar, don’t fret. We will work with you to find the right lender and loan terms for your credit situation. We believe that all drivers deserve access to quality vehicles.
Tips for a Successful Pre-Approval Process
So, how can you ensure pre-approval for an auto loan? Here are tips for a successful process:
You need to start by improving your credit score. A higher credit score usually results in better loan terms. Work on your credit score if needed, paying down current debt and making on-time payments. Be sure to check your credit report for errors, too.
Compare lenders. No two lenders are the same, so terms and interest rates vary. Take your time comparing them to find the best deal. Check with local credit unions, banks, and online lenders to explore your options.
Knowing your budget is crucial. Think about your monthly income, expenses, and how much you can reasonably spend on a car. You don’t want to overspend. It will come back to bite you.
This should go without saying, but it’s essential to be honest on your pre-approval application. Always give accurate information about income, expenses, and employment; otherwise, you might get denied or receive unfavorable terms.
Don’t be afraid to ask your lender questions. Understanding the loan terms is critical so you can make an informed decision.
Pre-Approval as a Smart Financial Move
Securing pre-approval for an auto loan is a smart financial move. Pre-approval shows that you have taken the time to prepare your finances before making a large purchase. This degree of diligence is a significant aspect of responsible financial planning.
You get protection from high-pressure sales tactics when you are prepared. Without pre-approval, you could be vulnerable to high-pressure sales tactics from certain dealerships (not ours). Some salespeople try to steer folks toward more expensive vehicles to increase their commission. When you’re pre-approved, you control your budget and aren’t susceptible to shady tactics.
There will be better long-term financial outcomes. Your terms and interest rate can impact your long-term financial outcomes, with lower rates and better terms saving you money over the life of the loan. This can lead to better overall financial health.
Be confident in your purchase! Focus on finding the perfect vehicle for you without worrying about financing options falling through when you have pre-approval in place. This peace of mind cannot be understated when making such a huge investment.
Some Final Thoughts
When it comes to buying a vehicle, getting pre-approved for a loan is a wise move. It gives you numerous benefits and a lot of peace of mind. By going through the pre-approval process and comprehending the nuances of various financing options, you can make a well-informed decision and find the best car for your financial needs and goals.
Before you begin looking for a vehicle, take the time to get pre-approved. This can help you get on the road more successfully in a car you love and can afford.