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Why Get Pre-Approved For a Car Loan

If you intend to go on a road trip you’re going to have to purchase your vehicle somehow.

Shaking hands car

When you get pre-approved for a car loan, you’re walking into the dealership with the essential part of the transaction done. It’s wise to go into the dealership with financing wrapped up for many reasons that we detail below.

If you’re seeking a great rate on a car loan, this site can help you get pre-approved fast. 

You’ll Stick To A Budget

A pre-approval from a car financing company tells you exactly what you can spend on your vehicle. Remember that you also need to pay taxes and fees. So, if you were approved for a $30,000 loan, look for a vehicle that costs maybe $25,000 or $27,000.

Having a budget to stick to in a dealership is essential because you’ll come under pressure to move up to a more expensive model with more horsepower, leather seats, etc. The more car the salespeople sell, the more money they make.

You Can Compare Interest Rates

The Internet is a beautiful thing for shopping car interest rates. There isn’t a guarantee that you’ll get the lowest rate with your pre-approval, but you’ll be able to compare rates you get at the dealership.

There’s a good chance the dealership will try to beat your rate. There’s nothing wrong with them trying. But you know at the end of the day that you have a good deal in your hand. That said, it’s possible the dealer could give you a lower rate because car makers subsidize the rates to get more business.

Negotiation Is Easier

When you have a pre-approval, you can go car shopping like a check is in your wallet. This keeps you focused on what the car is sold for. You can just ask the salesperson what is the out the door price for the vehicle.

This keeps negotiations short and sweet. And if you can’t reach a deal on the car, you aren’t tied to the finance office in the dealership. You can walk away with your pre-approval and try another dealership.

No Spot Delivery Drama

Financing problems at dealerships can happen when they allow a customer with poor credit to drive off in a vehicle as the dealer-arranged financing is hammered out. This might happen if you buy on a weekend night when the financing companies are closed.

Three days later, you may get a call from the dealer saying the loan was denied and the car has to be brought back. You can reapply for a loan at a higher rate or put more money down. You can avoid this hassle by cutting the dealership financing out completely.

Shop Like a Cash Buyer

When you have a pre-approval, you can walk the dealership like a cash buyer and focus on the sales price. Dealers want to get you focused on the monthly payment, but that can be manipulated by extending the loan term.

When you have a check in hand, all of your focus and energy can go to getting the best price on your car.

Saves Time

When you go into a dealership with no financing, you have to go through two sales pitches: on the car and then the financing. Some of this delay is understandable. It takes a lot of paperwork to buy a car. But if you have your pre-approval, you will spend about half the time that you usually do.

When the finance manager tries to sell you the extended warranty, you can say you have a pre-approval limit, so you can’t do it.

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