Pre-approval is when you seek finance first before looking for a car to buy. This is beneficial for a number of reasons;
1. You’ll know if you will be approved or not – It will be a waste of time if you searched for the right car, only to end up being denied a car loan.
2. You’ll know how much you will be approved for – No overspending and you know exactly how much to bargain for at the dealership.
3. Sure car loan – Since you are already pre-approved, all you need to do is look for the best car that fits your budget.
4. You’re as good as cash buyer – With the pre-approved car loan on hand, you are in a better position to negotiate a price and dealers will try to match your demands because what you have is as good as cash.
How to start the pre-approval process?
Check your credit score – Check your credit score for errors and inaccuracies. If you find some, file a dispute in order to correct the error. Most of the time, when the errors are removed, the result is a better credit score.
Check your debt-to-income ratio – Be honest with yourself and assess your finances. Better still, have a finance broker do it for you.
Compare loan rates – Talk with a finance broker in order to get quotes from different lenders with just one application.
Once approved, you can go to a dealerships and shop around for your new car. Pre-approved car loans can also be used to buy from auctions and private sellers.