It’s no secret that car shopping is an important yet stressful process, but there are certain actions you can take immediately to make your big-ticket purchase a far simpler affair.
Getting Auto Loan Pre-Approval vs. Pre-Qualification
Most car shoppers are aware they should pursue a pre-approved auto loan through a trustworthy lender, but many make the error of mistaking auto loan pre-approval for auto loan prequalification.
While the differences between the two may appear to be nothing but semantics, there is a clear reason why you should choose one over the other.
Auto Loan Pre-Qualification
This is the process of evaluating your credit score, credit history, borrowing amount, and other important financial markers to decide if you would be a qualified borrower.
Pre-qualification is simply a cursory glance at your financial history and a tentative review of your creditworthiness. Getting a positive response to your pre-qualification does not mean you have received pre-approval for an auto loan.
Auto Loan Pre-Approval
This is the process of thoroughly evaluating your financial statements and related documents to help officers make a concrete loan offer. While these are not always black-and-white statements regarding your creditworthiness, they are excellent indications of the amount intended to be loaned to you.
Some lending companies, including public banks, may use the above terms interchangeably. This means you should carefully evaluate your lending options before getting a hard inquiry on your credit.
There are dozens of benefits to getting your loan pre-approved, especially when it comes to the practical aspects of securing your next vehicle.
1. Boost Bargaining Power
Dealerships and other sellers look favorably upon shoppers with an auto loan pre-approval. Not only does pre-approval speed up the process and give you a jump start, but it also arms you with purchasing power and shows a seller you’re serious to buy.
2. Obtain Priority To Purchase
Once you have an auto loan pre-approval, you can purchase a car immediately. Because of this, sellers are eager to give you both higher priority and greater preference.
3. Objectively Instill Confidence
As a borrower, auto loan pre-approval provides stability in all your car-buying affairs. From research and dealership visits to inspections and test drives, knowing that you have done the legwork simplifies the process.
4. Achieve Balance With Your Budget
Having a solid game plan for your money is an important step in buying a car, especially after getting your auto loan pre-approved. Pre-approved auto loans provide a set budget that will ultimately help to guide your final decision about price points.
How Applying For Auto Loan Pre-Approval Works
Done with the right lender, applying for auto loan pre-approval is quick and easy. In many cases, this is a process that can be done right from your phone.
Here are four general steps for how to apply for an auto loan pre-approval. Keep in mind the process varies by lender.
- Decide if you want to purchase a new or used vehicle. This will help loan officers determine the circumstances of your pre-approval.
- Consider your lending options. Financial institutions such as Greater Texas Credit Union offer low-interest rates and come with excellent member benefits and outstanding customer services. Obtaining membership at your local credit union depends on your occupation, association, and community.
- Get your financial ducks in a row. This means you should pay special attention to your credit scores, as well as habits that could make it difficult to pre-qualify for an auto loan.
- Fill out your loan application online or in-person, and await your results. Once received, you may proceed with your car shopping and notify any dealers of your pre-approved status. This pre-approval will last for approximately 30 days.
Get There Faster With Greater Texas Credit Union
Getting auto loan pre-approval is a great first step towards securing your next vehicle, but it is by no means the last one you’ll need to take.
With so many steps along the way, trust Greater Texas Credit Union to get you out of the lot and onto the road faster. Our team of experienced lending professionals is equipped to guide you through your next vehicle purchase and beyond.