While looking into buying a used or brand new car, you probably came across offers like ‘get pre-approved for a car loan’ from reputable auto car dealerships. And if you are interested to know more about it, and whether you should consider it or not, then you have come to the right place. So before you choose Used Cars in Bakersfield, here’s what you need to know about pre-approved car loans.
All About Pre-Approved Auto Loans
Getting pre-approved for a car loan is much like getting a pre-approval for a home mortgage. This is not a requirement, but an option if you want to get a loan. If you have a pre-approved car loan, it means that the lender has already agreed for you to borrow a certain amount even if you have not picked out your car yet. This will give the dealership the assurance that the lender has already okayed for you to obtain a car loan for a certain amount.
Pre-Approval vs Pre-Qualification
Aside from the pre-approval for a car loan, you might have also heard about loan pre-qualification. But you have to take note that getting pre-approved is not the same as getting pre-qualified. For the pre-qualification, the lender will be using your provided information to give you rates and terms available for you. This is not a hard offer because the lender will not perform a hard inquiry on your credit. And if you use your pre-qualification approval, it will not be as strong as the pre-approval.
Get Pre-Approved for A Car Loan
Now that you know what pre-approval for a car loan is all about, the next thing to ask yourself is if you should have one or not. There are several advantages they come with getting pre-approved for a car loan. Here are some of the most important reasons that can help you decide:
- You Are More Prepared. If you get pre-approved even before you choose the car to purchase, this will take the stress away since you know what to expect. You already know how much your budget will be even before you visit a car dealership. Also, you now have an idea what your monthly loan payments will be as well as the loan term.
- You Can Negotiate for Better Offers. As mentioned above, getting pre-approved is stronger than getting pre-qualified. If you are pre-approved, you will have better chances to be in a good negotiating position. This will give you the upper hand to negotiate for the best price with your chosen dealership.
- Have The Freedom To Choose. With a pre-approval, you have more freedom to buy the car you want at any car dealership. If you do not find the car that suits your needs and budget at a certain car dealership, you can always shop around before you decide since you are already pre-approved by a third-party institution.
Now that you know why getting pre-approved is crucial, then it is time to have it done before you visit your local car dealership. In fact, even if you have not chosen a car just yet, it is best to process your pre-approval for a car loan in advance to give you a headstart.