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Why You Should Get Preapproved for a Car Loan

iCrowdNewswire   Nov 10, 2020  8:54 AM ET

To sell any car or buy one, you need to be well prepared! Buying a car is not a piece of cake especially when it comes to buying one on a budget. Buying cars on cash can find you a good deal, but when you are buying it on credit, things get tough. Car loans have become a good source to ease out the stress, however being well prepared for that is essential too.

Being pre approved for automotive loans is suggested, where being pre approved for a car loan means that the lender is well aware of your financial history and other information to determine your need.

Here are reasons why you should be pre-approved for a car loan!

  1. Better Interest Rate

Being pre-approved by a bank or a credit union allows you to understand your needs. In case you are not aware, the dealer may lure you into a dealership that does not fulfill your requirements and brings you loss. You can determine a better interest rate once you are prepared through the preapproval. You understand the market and can compare different interest rates.

  1. Budgeting

Budgeting becomes relatively easier when you are pre-approved, you know your requirements while your dealer knows your needs as well. You can  find auto loan plans online as well as calculate the down payment and trade in value to understand the amount you require for the loan. Additionally, it is important to cater the need of insurance as well as sales tax and other unforeseen fees etc.  You can determine the car you need when you know the interest rates offered in the dealerships.

  1. Negotiating

Being pre-approved for a car loan helps you stick to your price, While negotiating with your dealer, you know the market rates and your required model. You can always be assertive of your needs and are catered properly when the dealer knows you are there to buy for sure. All dealers tend to cater pre-approved customers as they know they are there for a purchase.

While signing the deal off, you can get rid of any third party warranty offered or any other add ons that would only add to your budget. You can always demand to be on the budget as set under the pre-approved car loan.

  1. Credit Score

Credit score is your rate of financial stability with payments and other financial dealings. When you are paying regularly with a car loan that has been pre-approved, it indicates that you stick to your plans and follow your budget. You will have an instant increase in your credit score with regular payments.

  1. Spot Delivery and Yo-Yo Financing

When buying a car on a pre-approved loan, it is known that your loan is given a green signal by the bank. If you are buying a car without being pre-approved, there is a risk of it not getting it approved. Dealers may try to give you spot delivery which is selling the car on spot without financial processes being completed. In that case, if your loan is disapproved, you have to reapply through the dealer with higher interest rates and lack of surety of it being approved. You owe the dealership the money regardless of the loan being approved.

Yo-Yo financing is when deals are made at hours when the banks are closed. Customers with a low credit score are the target of this where dealers sell them cars at such hours without the bank approving their loans, adding to the risk. Hence, having a pre-approved car loan can save you from such risks and financial loss.

  1. Less Liability

With a pre-approved loan, your dealers know your requirements. It is between the dealer and the bank or credit union to determine how to complete your funding. Your budget is predetermined and you can negotiate keeping in view your credit report. It saves you a lot of time and calculations and increases your negotiation power in the deal.

There are good deals you can find through dealers, however pre-approved car loans are considered the safest and reliable option when buying a car not on cash. Still, can’t find a good deal or rate, you can visit our site to sell and buy cars; used and new. The thought to sell my car in Dubai, is our favorite!


Tags:    Content Marketing, English