How to Get Pre Approved for a Car Loan
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Many people opt to get pre approved for a car loan when beginning the process of shopping for a car. A pre-approval is essentially just when a lender looks at your financial situation and the car you’re planning on buying, and lets you know what type of deal they’re comfortable giving you. So, you are pre-approved, but you’re not yet signing the loan. It’s a common approach for car buyers, and it makes the process a lot easier. Here’s how.
What are the benefits of getting pre approved for a car loan?
One of the benefits of a pre-approval is that it allows you to set a firm budget, since you know exactly what you’ll be paying and what the terms of the loan are. This not only allows you to develop a budget, but keeps you from getting talked into a financially irresponsible loan while caught up in the moment at the car dealership.
When you get pre approved, you also strengthen your ability to negotiate with a car salesperson. You’ll already have the terms of the loan figured out, which means you can be strong when going back and forth over the price of the car. With a pre approved loan, a car salesperson will only be selling you on the car price, not on the loan price, and this makes it easier to get a good deal.
Finally, getting pre approved simply makes it a more comfortable process, since it’s one less thing to worry about.
Step 1: Determine which lenders you want to get a pre approval from
The first step is to figure out which lenders you want to seek pre approval from. It’s a good idea to do your research, and find some lenders that you feel comfortable with. It’s also a good idea to include your bank or credit union in the group. A bank or credit union that you already use will be familiar with you, which not only means that you already have communication with them, but also that you’re more likely to get a good rate. Choose two to four lenders that you like, and you’re ready to move forward.
Step 2: Contact the lenders about the pre approval process
Now that you have two to four lenders picked out, it’s time to contact them. You can do this by going to the lender in person, calling them on the phone, or visiting their website, which should have a pre approval application option. Let the lender know that you’d like to apply for pre-approval. They’ll let you know what the next steps are.
Step 3: Fill out any necessary paperwork required
Now that you’ve begun the pre approval process, follow the instructions of the lenders for filling out pre approval forms. These might be standard paper forms that you need to manually fill out, or, more often than not, they’ll be an online application. Some lenders might even let you apply for pre approval over the phone.
Many people are hesitant to get pre approved from multiple lenders, because the lenders perform a hard inquiry on your credit score, which can have a small, temporary hit to your credit. However, if multiple lenders perform hard inquiries around the same time, it will only count once.
Step 4: Wait and review your pre approval options
Now that you’ve applied for your pre approved loans, sit back and wait for the offers from the lenders to come in. Once the offers have rolled in, you can decide which one is best for you, and begin the process of purchasing your car, and getting your loan.