Buying a car can be costly and time consuming. If you are in the market for a new vehicle and want to use an auto loan for purchase, getting pre-approval can save you time and money. Here are a few reasons why you should take the time to go through the pre-approval process.
- Sets your budget. Getting pre-approved for a certain amount simply helps you stay within the boundaries of what you can afford. In some cases, this can help you narrow your choices or just have an added benefit of knowing you are able to purchase the car you want before you drive to the lot.
- Lower interest rate. Pre-approval helps you to negotiate not only once you get on the lot, but also with your lender. Pre-approval sets you apart as someone of low risk to lend to, which gives you the power to negotiate a lower interest rate on your loan!
- Operate like a cash buyer. Once you get pre-approved, the lender will usually issue you a check or paperwork stating you’ve been pre-approved for an amount which you can take to the car dealership. Having this gives you the added advantage to negotiate like someone who is paying cash for their vehicle.
- Negotiating power. Buying as a cash buyer gives you the chance to negotiate the overall price, but it also allows you to negotiate your interest rate. Most dealerships offer in-house financing. If they want to offer you financing instead of your lender, they will have to offer you a lower interest rate.
- Save time. Negotiating and test driving can be a long process, even if you walk onto the lot knowing exactly which car you’d like to purchase. Pre-approval with a lender helps you save money, but it also helps save a lot of time! Unless you’d like the option of going through the dealership for a better interest rate, you won’t have to run your credit or wait for an approved loan from multiple lenders at the dealership. No one wants to spend all day in the dealership finance office when they’re buying a new car, pre-approval on your loan will ensure you don’t have to!