The Benefits of Pre-Approval

1. Get an Idea of What you can Afford
You may be tempted to begin your search for cars by visiting dealerships in your area but hold off until you have pre-qualified for a car loan. The pre-approval process lets you know exactly how much money you're allowed to spend based on your income, employment history, credit score and existing debt obligations. This way there won't be any unpleasant surprises when you start talking to dealers and making offers on vehicles.

2. You'll Be Better Equipped to Negotiate a Good Price
When negotiating for a car, pre-approval will let the dealership know that you're serious about buying. This means that they won't try to "take advantage" of your inexperience during the sales process. If nothing else, pre-approval will give you some leverage when it comes time to talk numbers with the dealer because pre-approved buyers are always in high demand by car dealerships looking for new inventory.

3. It's Easier to Switch Between Dealers
The pre-approval process is also useful if you want to buy from more than one dealership. For example, if there are several dealerships in your area, pre-approval will let the different sales managers know how much you can afford to pay for a car. When they find the vehicle that you want, pre-approval also prevents other dealerships from wasting your time with high-priced options that are out of your budget.

4. It's Safer than Financing Through the Dealership
Some people choose to finance their car purchase directly through the dealer because it means that they won't have to deal with paperwork or complicated terms and conditions. However, pre-approval is still preferred because pre-approved loans are typically much better deals. Since pre-approval happens before you even step foot on a lot, pre-approval saves you money by making sure you don't accept an on-the-spot loan that could come with hidden fees and high-interest rates. In fact, pre-approval is the best way to get a great deal on your car, because pre-approved loans are among the least risky loans for dealerships.

5. You're Less Likely to Regret your Car Purchase Later
In many cases, pre-approval will save you from making a major mistake after you've already purchased a vehicle. For example, if you didn't pre-approve before going shopping, but found a vehicle that was well within your budget, there's always going to be doubt in the back of your mind about whether or not the dealership tricked you into paying more than what you to spend. This kind of doubt can be frustrating, and it may not go away anytime soon.

6. You Don't Have to Pre-qualify for a Loan
The pre-approval process is like pre-qualifying for a home loan, but it doesn't require you to provide bank statements or specific financial information. Other than your income and employment status, lenders typically preapprove you without asking too many questions. This makes preapproval an efficient way to know exactly how much money you're allowed to spend on a car before going shopping. As long as your credit score is good and you make enough money to support the loan payments, pre-approval will let you know that there's nothing standing in your way of buying a car on credit if that's what you decide to do.

7. You can Pre-Qualify with a Larger Loan Amount
If you want to pre-qualify for a car purchase with a higher price tag, pre-approval lets you know exactly how much money you're allowed to spend before going shopping. This gives car buyers the power to buy from dealerships that have lower prices or sales commission fees because pre-approved buyers are always in demand by car dealerships with high turnover rates. Of course, pre-approval isn't a magic bullet and is only the first step in the process of buying a new vehicle. But it is an essential part of making sure your search for a new car goes smoothly and is worth every penny when you drive your dream ride from the dealership.

Pre-approval is the best way to make sure you get a great deal on your car. By pre-qualifying for a loan, you're letting the dealer know that you're serious about buying and have already done some of the legwork when it comes to getting financing. This puts you in a much better negotiating position and can prevent dealerships from wasting your time with high-priced options that are out of your budget. In many cases, pre-approval will save you from making a major mistake after you've already purchased a vehicle. For example, if you didn't pre-approve before going shopping, but found a vehicle that was well within your budget, there's always going to be doubt in the back of your mind about whether or not the dealership tricked you into paying more than what you to spend.

Conclusion

Pre-approval is free, and it makes buying a car faster and easier because pre-approved loans are among the least risky loans for dealerships and pre-approval lets buyers know that there's nothing standing in their way of buying a car on credit if that's what they decide to do. Many people pre-qualify with a larger loan amount, pre-approval helps determine an exact price range when looking for a new car before going shopping. As long as your credit score is good and you make enough money to support the loan payments, pre-approval will let you know that there's nothing standing in your way of buying a car on credit.