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What does pre-approval mean for a car loan?
I’ve been shopping for a new car, and I know I’ll have to take out a car loan to afford it. My parents recommended I get pre-approved for a car loan, but I don’t understand what that means What does pre-approval mean for a car loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You must be excited to be shopping for a new car, and it was nice of your parents to give you some advice!
When it comes to
car loans
, pre-approval means the lender has reviewed your credit history, is willing to offer a loan, can let you know how much they are willing to lend, and advise you on what the interest rate will be. Getting pre-approved for the car loan makes setting a budget and understanding what you can afford more straightforward and can help you avoid being talked into a more expensive vehicle at the dealership.
Regardless of whether you’re pre-approved or applying for a loan after finding the car, you should still shop around and compare offers from a few lenders to find the most favorable agreement.
Finally, once you’ve found your lender and the vehicle you want, you’ll also need to provide
proof of insurance
. To find a customized policy for you, use Jerry
, an insurance comparison app that shops for low prices with over 50 different insurance companies, including Nationwide, Allstate, and Travelers, for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away! MORE: What to do after buying a new car
View full answer
- Gregory R.
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