Why is getting a preapproval for a car loan the best way to negotiate with a dealer?

I've heard that getting preapproval through a bank or credit union is the best way to negotiate with a dealer. Is this true? Why?

“Yes, getting a preapproval through a lender for a new car is almost always the best way to negotiate with a dealer.
With a preapproval, you know exactly how much you can spend on a new car. You can also use your preapproval to negotiate the car’s price with the dealer.
If you decide to get financing through the dealer, it can also help you negotiate a better deal.
Also keep in mind the cost of insurance for a new vehicle. Most dealers and lenders will require full coverage on a financed car.
Use the free Jerry app to find the best deal. Jerry compares rates from the top 50 companies and delivers the best deals to your phone in minutes.”
Eric Schad
Answered on Aug 02, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

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