There are plenty of things in life that are worth shopping around for. Whether you're dating, hunting for that perfectly grilled burger in town or buying your next car, it’s smart to keep your options open. When it comes time to finance a large purchase like a car, shopping around for the best interest rate opens the door to serious savings in the long run. Car loan pre-approval means that a lender offers you a loan amount and interest rate to purchase a new or used car before you go to the dealership. Here's why pre-approval can be a very good route to take and where you can get started.
What are the Benefits?
Getting pre-approved has its perks. You’ll likely be able to find a better interest rate by shopping around and you’ll have a better idea of what your budget is when you are ready to buy. Plus, you’ll simplify your dealership experience and be better equipt to negotiate.
- Gives You Interest Rate Options
Getting financing at a dealership can be convenient for a one-stop experience, but if you have not done your research, you may get sucked into paying a higher interest rate than you could have gotten elsewhere. Over the lifetime of your loan, you could be looking at thousands of dollars saved by getting a better interest rate. You can get yourself a lot of perfectly cooked burgers with that!
- Helps You Set a Budget
Getting pre-approved will allow you to know your interest rate and estimate your monthly payments before ever stepping foot in a dealership or car lot. When you know what your monthly payment will look like, you’ll reduce the odds of being tempted into a car you can’t afford.
- Makes the Dealership Experience Better
The actual car buying experience will go a lot faster and smoother if you can get pre-approved for a car loan. In addition to spending less time in the finance office, you can also use your pre-approval as a bargaining chip. If the dealer wants to offer you financing, they will have to compete with the rate you’ve been offered.
Where to Get Started
Maybe you still haven’t found the perfect burger or soulmate, but the thought of a lower car payment sounds appealing. So where do you turn?
There are a few different routes you can take to get pre-approved for a car loan. These include going through a bank, credit union or online lender. Here at Web2Carz, we work with a nationwide network of auto finance partners to find shoppers the best loan rates for their needs. You’ll be able to get pre-approved for either a new car or used car and if you’re stuck in an existing loan with a
After you apply for pre-approval, the lender will pull a hard credit check. According to Nerdwallet, this puts a slight ding on your credit score, but shopping around for a good rate will still work to your advantage. If your credit score is pulled multiple times within a short period of time, like 30-45 days, it will only count as one hard inquiry.
After the lender receives this information, they will present you with a loan amount, interest rate and loan terms. Those with a lower credit score will typically be offered a higher interest rate than those with good credit, but at the very least, pre-approval will provide an idea of what to expect and what car will be realistic to buy.
We would recommend getting pre-approved when shopping for a new or used car in order to avoid any surprises when it comes to your approval status and interest rates. It’s a simple application process that does not obligate you to go with any particular lender but does increase the number of loan options you have and your negotiating power when purchasing your car.