4 Major Benefits Of Getting Pre-Approved For A Car Loan
Posted on: 8 October 2015
Unless you plan on paying for your next car in cash, you're going to want to apply for an auto loan. Essentially, there are two types of auto loans available to most buyers: loans you obtain from the dealership, and loans you obtain from a private party outside the dealership. With a private auto loan, you can get pre-approved for a certain dollar amount before you even set foot inside the dealership, which can benefit you in a number of ways.
A Free Copy of Your Credit Report
For starters, when you apply for an auto loan with a private lender, you'll automatically receive a copy of your credit report along with your decision letter--regardless of whether your application is approved or not. This is great for getting a better idea of where your credit stands without having to spend money on a credit reporting service or going through the hassle of requesting a report from a bureau. You can then use your credit report information to decide whether or not it may be worth it to shop around for your loan.
Getting a Better Idea of What You Can Afford
When you receive a pre-approval for an auto loan from a private lender, they'll give you a maximum dollar amount for which you're approved. When they decide on this dollar amount, they take a number of important factors into consideration, such as your income, existing debts, and debt-to-income ratio. The pre-approval amount isn't always the amount you should spend on a new car, but it can at least give you a ballpark idea.
Avoiding the Back-and-Forth at the Dealership
When you get pre-approved for a car loan outside of the dealership, you can save yourself the hassle of going back and forth with the dealership financing manager, which can be time consuming and stressful. Instead, you'll already have your approval letter from your lender, so all that you'll have to do is work on negotiating the sticker price of your new car. This saves you time and stress in the car-buying process.
Greater Confidence at the Dealership
Last but not least, having a pre-approval letter in-hand when you show up at the dealership will give you greater overall confidence as you shop for your next car. As you browse the lot, you won't have to wonder to yourself whether or not you can get approved on an auto loan for the vehicle you choose. Instead, you'll already know what you can and cannot afford.
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