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  • Writer's pictureAshley Van Rosmalen

Car Loan Pre-Approval: What It Is and Why You Need It?

If you’re in the market for a new car, getting pre-approved for a car loan can be a wise decision. Pre-approval means that a lender has reviewed your financial information and has agreed to lend you a certain amount of money at a specific interest rate. In this article, we’ll take a closer look at car loan pre-approval and why it’s essential for anyone looking to finance a new car.


What is Car Loan Pre-Approval?


Car loan pre-approval is the process of applying for a loan and receiving approval for a certain amount of money before you start shopping for a car. During the pre-approval process, the lender will review your credit history, income, and other financial information to determine how much money they are willing to lend you and at what interest rate.


Why You Need Car Loan Pre-Approval?


1. Know Your Budget

Getting pre-approved for a car loan will give you a clear understanding of how much money you can borrow and what your monthly payments will be. This information will help you determine what type of car you can afford and will save you the hassle of falling in love with a car that is outside of your budget.


2. Negotiating Power

Having a pre-approved loan in hand when you visit a dealership gives you negotiating power. You’ll know exactly how much money you can spend and what interest rate you can qualify for. This puts you in a better position to negotiate a fair price for the car you want to buy.


3. Saves Time

Getting pre-approved for a car loan will save you time at the dealership. You won’t have to go through the financing process with the dealership, which can be time-consuming. Instead, you’ll be able to focus on finding the right car and negotiating a fair price.


4. Credit Score Protection

When you apply for a loan, the lender will typically perform a hard credit inquiry. These inquiries can negatively impact your credit score. However, when you get pre-approved for a car loan, the lender will typically only perform a soft credit inquiry, which won’t hurt your credit score.


Car loan pre-approval is a valuable tool for anyone looking to finance a new car. It gives you a clear understanding of your budget, negotiating power, saves you time at the dealership, and can help you get better interest rates. If you’re in the market for a new car, consider getting pre-approved for a car loan before you start shopping.


Working with a finance broker can also help you secure the best financing options and repayment terms. Speak to us today to get your finance pre-approval in place ready for your next car purchase.




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