Whether you’re looking to buy a new or used car, there are countless great dealerships down the street like Holt Chrysler Jeep Dodge
that have a huge inventory of cars suitable for your family. But depending on how long it’s been since your last car purchase, you may have forgotten the process. Of course, you have to select a car and then speak with the finance department. Although this is the typically way to complete a purchase, it’s not the only way.
If you have a relationship with a bank in your local area, consider four reasons to get pre-approved for an auto loan before heading to the dealership.
1. Know what you can afford
Let’s be honest, you don’t know what’s affordable until a finance company pulls your credit and reviews your existing debts. The time to discuss affordability isn’t after you’ve selected a car. Imagine the disappointment of choosing a car and then having your application rejected because the price is too high. This can happen when you secure financing at the dealership. But if you work with your bank beforehand and get pre-approved, the bank determines an affordable amount before you start shopping. With this approach, you can look at cars in your budget, and you avoid falling in love with a vehicle that you cannot afford.
2. No surprises
But affordability isn’t the only reason to get pre-approved. Maybe you have the cash flow to make the monthly payment. Don’t assume that this is your ticket to an auto loan. Your credit score plays a big role in the decision process. Going through the pre-approval process can determine whether you’re even eligible for an auto loan. This can eliminate any surprises, giving you the opportunity to improve your credit before you shop and get excited about a new car.
3. Better rates
Do you want to save thousands over the life of your vehicle loan? To accomplish this, you need the best interest rate possible on your vehicle loan. Getting pre-approved and securing your own financing can result in better rates because there’s no middleman padding the rate to earn a higher profit off the sale. At dealerships, everyone’s looking to earn a piece of the profit. Yes, it’s convenient to get your financing at the dealership, but you’ll pay for this convenience in the form of a higher interest rate.
4. There is no cost to you
Getting pre-approved is free and fast, and you’ve got nothing to lose. You can visit a bank branch in-person to complete an application or submit your application online. The bank will need your income information, plus permission to pull your credit report and score. Not to say you shouldn’t compare rates with the dealership. It always helps to have at least two loan quotes to ensure the cheapest rate.
Don’t walk into a dealership without doing a little background work. Submit your application for an auto loan pre-approval, and most banks will respond with an approval or rejection by the next business day – sometimes sooner.