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Is Getting Car Loan Pre-Approval Worth It?
●January 8, 2021●5 minute read
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So many people have dreamt of having a car at some point in their lives. Some of us desire to have one but do not have the funds to own one. For some other people, on a typical day, buying a car would be a problem, but the timing is just not right. Well, it is for those who cannot afford one and at those rough financial times that loans can swoop in out of nowhere, like a knight in shining armour, to save the day. You could easily find yourself in a dilemma if you have never taken out a loan before and when it comes to financial matters, knowledge is power. There are so many questions that are yet to be answered like how do car loans work? What are car loan pre-approval? Would getting a pre-approval with my car loan be beneficial to me? Throughout this write-up, we will try to answer some of those questions.
What is a Car Loan Pre-approval?
Car loan pre-approval is an approval granted by a particular lender which gives you the ability to borrow a specified sum of money towards the purchase of a car before you buy the vehicle. Keep in mind that this is just approval for you to receive the money. The car loan is final after you have chosen a specific car from a particular dealership. Also, note that permission is not an obligation on their part to provide the money. If you do get approved, and after selecting and signing purchase documents with the dealer for the car you want, the lenders will need to consent to the vehicle before disbursing the funds.
Why Should I Get a Car loan Pre-approval?
A pre-approval sounds nice but why bother to get one if it does not guarantee that I will receive the money? So how is getting a pre-approval supposed to help me? Does it matter whether I get pre-approved or not? It is entirely normal to look for how anything could be of benefit to you. Here are a few reasons why a car loan pre-approval is worth your efforts.
It gives you an upper hand when it comes to negotiations: Bargaining is a huge part of buying anything. Car dealers will take you more seriously with a pre-approval. Not only does it give you a positive image when you have evidence that you are ready and have the funds to buy a car, they know that you have most likely done some research. Dealers know that if you do not use that approval for their vehicle, you will use it for someone else’s. It also gives you the confidence to set the tone for the negotiations. Attempting to negotiate with a timid or uninformed person can be comparable to a stroll in the park or like taking candy from a baby; ensure you are not that baby.
Pre-approvals also give you the opportunity for better deals: Equipping yourself with a pre-approval gives you more options in terms of not having to go through the mechanic or dealership financing which are more likely to apply higher interest rates. Sometimes dealers can get a little desperate to sell their vehicles and get them out of stock. Their hastiness to sell might occur towards the end of months when they either have a quota to meet up with or because they are aspiring to restock on automobiles, as they have to sell to buy more. To sell off those cars, they might be willing to offer a loan which would rival that of the pre-approval and its terms. The deal could take the form of reduced interest rates or including add-ons or some other form of packages like some products for the cars or registration charges and the likes.
A pre-approval helps you save money: It spares you the hassle of trying to estimate how much you can pump out for a car. Though it is advisable to analyse your finances to establish what you afford independently, professionals are set on your case to help you determine that. In addition to taking on such an annoying job for you, it allows you to stay within a limit. In other words, it aids you in both knowing your budget and not exceeding that budget. The loan will not pay anything over the specified price you approve. Your fixed price range allows you to not fall for the sweet talks of the dealer, which you may have been susceptible to without an already fixed amount.
Car loan pre-approvals do not allow room for procrastination: It is unfortunate but true that most of us fall victim to instant gratification rather than the more logical long term plan. Pre-approvals give you only a few months of validity. This time frame is a reasonable amount for a person with serious intentions to acquire a car. Rather than continuously say you will “eventually” go to a dealership or “eventually” buy that car you liked a year ago, you will have to go out and do it. In summary, you can call yourself a car owner even quicker.
We have been through a few of the reasons it pays to get a car loan pre-approval before buying a car. From saving time and energy to saving money to boosting your confidence, to opening up more fantastic opportunities, to saving your time, there are multiple advantages to following this route. We, as people, need to feel like we are doing the best thing for us and not getting cheated in any way. Everything comes with both advantages and disadvantages, both pros and cons, but when it comes to getting a pre-approved loan towards the attainment of a car, it does seem to appear as having all pros.
There is nothing like a one size fits all car or approach. All we can do is try to inform ourselves and make the best possible choice under our current situation and available time frame.
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Written by Jacaranda Team