Steps To Getting a Pre-Approved Auto Loan
Those shopping around for cars should take advantage of pre-approved auto loans for new or used vehicle purchase. These loans offer financing completely outside of the dealer's lot and offers the security and confidence in purchasing your vehicle.
Take a look at how to use pre-approved loans and take the headache out of car shopping.
Get Your Credit Score and Proof of Assets
When you're looking at auto financing, there are two ways to go: secured and unsecured auto loans. For secured auto loans, you can use proof of assets, such as title to a home or other existing owned vehicle. It's important to understand that in a secured auto loan, these assets are vulnerable to seizure in cases of nonpayment. In an unsecured auto loan, your credit score is going to be your bargaining chip. Know what your score is and fix any existing problems with your credit before seeking auto loan approval.
Find Preferred Lenders
Find lenders who will give you good deals on auto financing. Some banks and credit unions are in the business of generally providing this kind of loan. Others are not. The best lenders will be able to give you competitive rates, often less than 10 percent, that help you purchase a vehicle in a series of payments without ratcheting up the total price to an overly inflated figure. Use any existing connections with a local credit union or other lender to your advantage.
Ask Your Lender What They Need
Some lenders require the VIN number and other information on the vehicle in order to make the actual loan. In these cases, pre-approval for an auto loan can work similarly to mortgage pre-approval, where the car shopper enters the lot with a letter from the lender recommending a specific amount for financing.
Get Your Pre-Approval Amount
The lender will look at your credit score and other elements and return a number to you: this is the maximum amount you will be able to use to finance the vehicle purchase if you go through that lender. See if this is compatible with your budget situation. If not, shop around for other lenders until you find the deal that you want.
The first time buyer is in this case able to get a low interest rate on their car loan and escape from the dealer’s price fixing. With the car loan being a transaction that is quite significant, you should bear the legwork as you check the interest rates from different lenders. Impulsively accepting the first offer that comes your way may well be the start of your financial troubles. Knowledge of the different rates lets you negotiate the best deal for your auto loan. A number of lenders offer their quotes online allowing you to subscribe to this over the Internet. You can therefore access all the information you need over this source.
Use Pre-Approval at Any Dealership
When you have secured a good deal with the lender, you should be able to use it at any dealership. Seek out the vehicles you like, and inform the dealer that financing is already taken care of. Dealer reps may be able to provide you with more information for implementing the financing deal, but if they try to take over by offering you better deals, always ask them to prove that their financing is superior to what you already have in hand.
Make a Down Payment
The ability to make a sizable down payment reduces the amount of installments you will have to pay during the loan period. This also means that you get to enjoy low interests and cumulatively the cost is smaller than would be for a customer with a low credit score. This keeps you on budget letting you access other lines of credit. Otherwise you may end up owing the car dealer more than is the cost of the car. Though approval may be hard for the first time car buyer, competition in the market makes it easy to get approval from auto loan providers.
A minimum of 20 percent down payment on the car cost lets you enjoy ample funds on your budget. Having shopped around for your desired vehicle, you can work out the amount to be borrowed. Checking this against the different rates charged by loan providers lets you plan your financial state in advance. This makes it certain for you to bargain a good price when transacting with the dealer. The seller is therefore unlikely to take advantage of you when prospecting for the car.