If you are in the market for a new car, you may find yourself wondering if you should get pre-approved for auto loans or wait and see what the dealership offers. Many people wait until they get to the dealership as they think the dealership can offer them the best loans and financing terms. However, this is not always the case. There are many benefits to getting pre-approved for an auto loan before shopping for and buying a car:
Gives You Time to Find Competitive Financing Terms
One of the biggest benefits to getting pre-approved for an auto loan is that it gives you time to find competitive interest rates and financing terms. If you wait until you get to the dealership, you may not know what current interest rates are, what you qualify for, and may have fewer options for financing. This is not optimal for finding the best rates and terms for you. When you handle it ahead of time, you have time to compare rates and shop around for the best financing terms for you.
Allows You to Know What You Can Afford Before You Shop
Another benefit to getting pre-approved for an auto loan before you even begin to shop is that you know what you can afford. When you are pre-approved for a car loan, you will learn how much the loan will be, how many months you have to pay, what your interest rate will be and what your monthly payment will be. In some cases, you may get approved for less than you expected or the car payment with interest may be more than you thought. Knowing ahead of time allows you to find a car that fits within the price range you can afford.
Provides You With the Opportunity for Negotiating Only the Purchase Price
The last benefit to getting pre-approved for an auto loan before car buying is that it provides you with the opportunity to focus on only negotiating the purchase price. When you go to negotiate the price of a car and you are financing through the dealership, the lines start to get blurred. They talk about monthly payments, interest rates and the cost of the car. It can be confusing with all of the numbers being thrown around and you may not know what you are negotiating. When you have a pre-approved loan, you can focus solely on negotiating the best purchase price for your car.
If you are planning on buying a car, take the time to get pre-approved for a loan. This allows you the opportunity to find competitive rates and financing terms, know what you can afford before you shop and allows you to focus on negotiating only the purchase price of the car.