If we lived in a perfect world, everyone would pay cash for large purchases like vehicles and would not have to fret over debt or monthly payments. But we live in the real world and that means that not many of us can pay cash outright for a vehicle. So we are forced to finance our vehicles when you need a loan for a car. If you happen to finance a vehicle at the car dealership, you are at the mercy of the finance department as well as the insurance department. What this does is limit your options for the best price. In order to avoid this, you should get pre-approved for your loan.
Where and How to Get Pre-Approved
You can get pre-approved for an auto loan through a traditional bank such as Wells Fargo, credit union or online lender such as Capital One. You will want to shop around since the interest rates as well as requirements for each loan will vary by lender. In order to get a good interest rate on the loan, you need to have great to good credit. If you have not-so-good credit, you may still be able to get a loan but your interest rate will be slightly higher. Once you are approved in advance for a loan, your lender can let you know how much you can spend on a vehicle and your interest rate.
Being Pre-Approved Lets You Stick to a Budget
If you are approved for a loan in advance, you will know exactly what you can spend. Of course, you will need to think about taxes as well as other fees. For instance, if you were approved for a loan for $20,000 you may want to consider looking for a vehicle that is around $17,000.
Getting Pre-Approved Allows You to Compare Rates
Just because you are pre-approved for a loan does not mean that you automatically get a lower interest rate. However, it does give you the edge so that you are able to compare interest rates with various dealerships.
Being Pre-Approved Will Save You Time
The one place that car buyers dread the most is the finance and insurance office. The reason is that it takes a great deal of time and a ton of paperwork. However, if you have already been pre-approved, your time will be sliced in half. Just because you are pre-approved for a loan for your vehicle does not mean you have to use that loan. Sometimes it may happen that the dealer can give you a better deal than what you were pre-approved for.