If you’re shopping for a car, new or used, and you expect to take out an auto loan to pay for it, you’ve almost certainly heard about “pre-approved” financing.
If not, learning about pre-approved auto loan financing ought to be high on your to-do list.
Of course, the ideal scenario is to pay for your car outright in cash. Besides avoiding monthly payments and interest charges, it enables you to aggressively negotiate on price, knowing you can take your business elsewhere if you want to.
In reality, very few of us are in a position to do that: consumers get financing to buy 86 percent of new vehicles and 55 percent of used, according to the Consumer Financial Protection Bureau (CFPB).
How pre-approved auto loans may improve car buying
Pre-approved car loans may strengthen the position of buyers relying on financing in a number of ways.
Firstly, getting pre-approved before visiting the dealership enables qualified consumers to shop with more of the confidence of a cash buyer because they know the terms for which they have been approved.
This enables them to concentrate on shopping for their vehicle, and negotiating a trade-in if there is one. That can be a great stress-reliever.
Main pre-approved auto loan options
So, where can shoppers get pre-approved for a car loan before heading to a dealership?
Auto loans are available from traditional banks, credit unions and online lenders such as RoadLoans. Interest rates and requirements will vary by lender, and the CFPB recommends shopping around for auto loan pre-approvals.
This in itself has further potential benefits that may save you time and money, according to the CFPB.
“Getting pre-approved by multiple lenders can mean that they may compete for your business. This puts you in a stronger negotiating position for whichever you chose. This can help lower your total cost.”
If the dealership offers you financing, you can compare the terms to those of your pre-approval, points out the bureau.
“Because you have pre-approved loan offers in your pocket, you get to choose whether to stick with one of them, or negotiate with the dealer for the best financing option,” it says.
Finding pre-approval with bad credit
The advertised interest rates you’ll see on websites are usually for those shoppers with the best credit. But if you have bad credit,* there may still be options (including RoadLoans). The rates might be higher, but at least you’ll know what you can afford.
Here’s what one RoadLoans customer, Benjamin M., had to say about his pre-approval experience:
“I have bad credit, so I didn’t think I would be able to get a new car. Well, after a short application, I clicked apply now and within a few minutes I had a pre-approval printed and in my hand.
“I drove to several dealerships and really shopped around. It felt good to already have my financing in hand, and the dealerships were much more eager to help me because of it. Overall I was able to set my own terms, pick the vehicle that I wanted and drive off in a beautiful car with very little money down!”
If you’re looking for a pre-approved car loan, apply for auto financing online with RoadLoans and get an instant decision.
* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.Written by: