Should I Get Pre-Approved for a Car Loan?

You’ve done your research, visited countless dealerships, and managed to find the car of your dreams. Now, there’s just one thing left to do: figure out how you’re going to finance your new vehicle. Unless you’re planning to pay for it all at once, you’ll need to secure a loan from a bank, credit union, online lender, or dealership of your choice.

As you begin to weigh your options when it comes to financing, you may find yourself wondering, “Should I get pre-approved for a car loan?” There are several advantages to getting pre-approved, including lower interest rates, more negotiating power, convenience, and more. Let’s take a closer look at how taking the extra time to get pre-approved before buying a car can set you up for success.

1. Empowers Your Budgeting Process

Getting pre-approved for a car loan puts you in the driver’s seat of your financial planning. With a clear understanding of the loan amount you qualify for, you can set a realistic budget for your car purchase. This empowers you to make informed decisions, ensuring that you choose a vehicle that not only meets your needs but also aligns with your financial goals.

Related: A Step-by-Step Guide to Financing Your Next Car  

2. Saves Time at the Dealership

Time is of the essence, and no one wants to spend unnecessary hours at the dealership. With a pre-approved loan, you can expedite the car-buying process significantly. Sellers view pre-approved buyers as serious and ready to make a purchase. This often leads to a faster, more efficient transaction, sparing you the hassle of lengthy negotiations and paperwork.

3. Enhances Negotiating Power

Armed with a pre-approved loan, you gain a powerful negotiating tool. Sellers are more likely to offer favorable terms and prices to buyers who come with pre-approved financing, as it reduces their uncertainty about the buyer’s financial capacity. This positions you to negotiate a better deal on the car’s price, interest rates, and other terms, potentially saving you a significant amount of money.

4. Provides a Clear Interest Rate Picture

Interest rates can have a substantial impact on the overall cost of your car loan. By getting pre-approved, you receive a clear picture of the interest rates you qualify for. This information allows you to compare rates from different lenders, ensuring you secure the most favorable terms. Knowing your interest rate in advance helps you make more informed financial decisions and avoid any surprises during the finalization of the loan.

Learn More: Auto Loan Interest Rate: Expectation vs. Reality

5. Protects Your Credit Score

Every time a lender pulls your credit report, it can have a minor impact on your credit score. However, when you’re shopping for a car loan, multiple credit inquiries within a short time frame are typically treated as a single inquiry. By getting pre-approved, you can shop for a car without the fear of damaging your credit score. This protection is crucial, especially if you’re considering multiple financing options to find the best deal.

Related: How to Get a Car Loan With Bad Credit

6. Streamlines the Financing Process

The car-buying process involves numerous steps, and financing is often a bottleneck. Getting pre-approved streamlines this part of the process, allowing you to focus on finding the right car. It simplifies the paperwork and reduces the time spent on finalizing the loan details, ensuring a smoother and more enjoyable experience.

7. Boosts Confidence and Peace of Mind

Knowing that you have been pre-approved for a car loan instills confidence and peace of mind. It removes the uncertainty and anxiety associated with financing, allowing you to concentrate on selecting a vehicle that suits your preferences. With the financial aspect already sorted, you can enjoy the excitement of buying a new car without unnecessary stress.

8. Encourages Smart Financial Choices

Pre-approval encourages responsible financial behavior. When you know the loan amount you qualify for, you are less likely to be swayed by high-pressure sales tactics or tempted to exceed your budget. This foresight empowers you to make smart financial choices, ensuring that your car purchase aligns with your long-term financial goals.

Financing Your Next Car at M&L

Still wondering, “Should I get pre-approved for a car loan?” While you can get pre-approved for a loan at a bank or credit union, we make it easy by offering an online application. Simply answer some questions about yourself and provide detailed information about your finances and you’ll be on your way to getting pre-approved. 

When you buy a vehicle from M&L, our finance professionals will be here to answer your questions and guide you through the entire process from start to finish. Take advantage of our dealership’s finance center, as well as our experienced team of dealers, and get one step closer to driving away in a new car.