If you have been debating about buying a new car, you may have heard of getting “pre-approved”. Getting pre-approved for an auto loan is a great way to budget yourself and to save time. By getting pre-approved, you will automatically know what you are able to spend and much less likely to go over budget.
What does pre-approval mean? It means that your lender (AKA bank, credit union, or financing company) has already evaluated you and approved you to get an auto loan for a certain amount. The lender will also tell you what amount you are approved for and the interest rate they will likely give you.
How to get pre-approved
Thanks to technology, there are numerous places you can get pre-approved both online and in person. Every single preapproval will require a hard credit check, so be sure to go over your credit score and credit report to ensure that all the information is accurate.
If you need your credit report, you are entitled to a free credit report once per year from the government mandated website www.annualcreditreport.com.
Now that you have your credit report and credit score in hand, you can now go to your local bank, credit union or CrediReady to find financing. If you are auto loan shopping within a 14 day period, you can have multiple “hard inquiries” placed on your credit, but they will only count as 1 single inquiry. This rule was specifically set up for loan shoppers so that multiple quotes wouldn’t hurt their credit scores.
If you are worried about getting contacted by multiple lenders through phone calls and emails, you can set up a temporary email just to find auto financing. Another trick is to get a free Google Voice number and give that number to the lenders.
After you have decided who you want to get an auto loan from, the lender will provide you with a document often referred to as “The offer statement”. This is a document that can come in the form of a simple letter, an online access code, or a blank check.
You aren’t required to commit to any single offer before you start shopping for a new car. However, it is always good to bring the document with you so that the car salesman doesn’t attempt to upsell you on unneeded packages and options.
All in all, getting pre-approved for an auto loan is the smart thing to do. It helps you stay reasonable when you might be tempted to go above and beyond your budget. If you are still searching for a car loan and have a less than ideal credit score, CrediReady can help! Our nationwide network of trusted lenders and verified dealers work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan search form today to get started!