If you’re looking at getting a car loan, you may have come across the term “pre-approved loan.” But what does that mean? Today we’re explaining exactly how pre-approved car loans work and how you can go about getting one.
What is a pre-approved car loan?
A pre-approved car loan is a loan that’s already been approved by a lender before you’ve even found a car.
With a pre-approved loan, you’ll know exactly how much money you have to work with, and you can use that to your advantage when negotiating with dealerships. You can also shop around for the best interest rate without having to worry about being approved or not.
How to get a pre-approved car loan
If you’re interested in getting a pre-approved car loan, the first step is to talk to your bank or credit union, or find an online car loan provider. You’ll need to provide some personal information like your living situation and employment history, as well as a rough estimate of what loan amount you’re after. The lender will also do a credit check. Once you’re approved, you’ll be given a loan amount and interest rate.
What happens after pre-approval car loan? You’re ready to start shopping! You’ll be able to head to the car yards and private sales with the confidence that you’re pre-approved, and a set limit in mind of what you can spend.
The benefits of a pre-approved car loan
There are a few benefits that come with getting a pre-approved car loan. First of all, as we mentioned, you’ll know exactly how much money you have to work with. This can be helpful when negotiating with dealerships, as they’ll know that you’re not going to go over your budget. Secondly, you can shop around for the best interest rate without having to worry about being approved or not. And lastly, having a pre-approved loan can help you get the car you want before it’s gone.
The downside of a pre-approved car loan
Of course, there are also a few downsides to getting a pre-approved car loan. For one, if you don’t find a car within the specified time frame (which is usually 60-90 days), you may lose the loan. Additionally, if you find a car outside of the dealership that’s selling for less than what you’re approved for, you’ll still have to finance through the dealership, which means they may not be willing to negotiate as much on price.
Pre-approved car loans can be a great way to get the car you want at a price you can afford. Just be sure to do your research and shop around before committing to anything.
Do you have to get a car from a dealership if you have a pre-approved loan?
No, you do not have to get a car from a dealership if you have a pre-approved loan. You can shop around for the best deal on the car you want and then go to the dealership that offers it. Remember, though, that if you find a car outside of the dealership that’s selling for less than what you’re approved for, you’ll still have to finance through the dealership, which means they may not be willing to negotiate as much on price.