4 REASONS TO GET PREAPPROVED FOR AN AUTO LOAN
If you’re in the market for a new vehicle, you probably have a lot of research to do and a lot of decisions to make. Do you want a car, a truck, an SUV? What color do you want? What size? Perhaps most importantly, how are you going to pay for it? Before you even go to the dealership, you may want to consider applying for a pre-approved auto loan. Let’s discuss the reasons why a pre-approved loan is a good option.
1. USEFUL WHEN SETTING A BUDGET
When you know how much money you’ll have to spend, you’ll know what you can afford. This will give you the confidence to stick with a car that’s in your price range. It’s important to set aside at least 10 percent of your loan for taxes and sales fees. You’ll also be able to calculate your monthly payments because you’ll already know the interest on your loan. Do remember to factor the interest on your loan into the total cost of your car and total monthly payments.
2. LOWER INTEREST RATE
A pre-approved loan usually comes with a lower interest rate. A lower interest rate means lower car payments over the term of repayment. If possible, you want to avoid higher interest rates on car loans. A higher interest rate means that you’ll end up paying more for a car that is depreciating in value. A higher interest rate also means that it will take you longer to pay off the loan.
3. THE UPPER HAND
With a pre-approved loan, you’ll have the upper hand when negotiating with the dealer. Usually, when a dealer knows you’ve already arranged a loan, they will try to find you a better deal, meaning a loan with a lower interest rate than what you’ve already been approved for. If by chance, the dealer can’t offer you a loan with better rates, you’ll still have your pre-approved loan as a plan B.
4. SAVE TIME
When you go to the dealership, it’s a good bet that you’ll want to spend more time test driving cars and less time in negotiation and paperwork. If you have a pre-approved loan, it can help save time on paperwork. It can also reduce the stress that often comes with making a major purchase. You’ll be able to set a budget ahead of time and not feel like you have to get everything done in one day while at the dealership. A pre-approved loan will give you time to think, which is important when deciding on what car you’ll be driving for the next few years.
These are just some of the benefits of getting pre-approved for an auto loan. Keep in mind that once you’re pre-approved, most loans are valid for 30 days after approval. Be sure to bring the pre-approval with you to the dealership, and don’t hesitate to ask if the dealer can offer you a better interest rate. Most importantly enjoy your new ride and please drive safely!