Key Takeaways
- Purchasing a car is one of the biggest purchases you’ll make, and you’ll likely do so multiple times throughout your life.
- You can get your auto loan pre-approved by an independent lender before you walk into a dealership.
- There are a number of advantages to getting your auto loan pre-approved.
When you encounter a bad wound, you’ve likely heard that you want to stop the bleeding right away. Placing pressure on the wound or cauterizing it may save a life. It might be very painful, but it’s important to stop the bleeding and get help.
We sometimes hear this idea of stopping the bleeding as a reference to figuring out how to stop unnecessary spending. This, too, can be a painful process, but important to do as soon as possible. One area where there’s a lot of potential for unnecessary spending is when purchasing a car.
Other than buying a home, purchasing a car is one of the biggest purchases you’ll make in life, and it’s likely something you’ll do several times. So it’s important that each time you buy a car, you’re making sure it’s fitting your budget.
There’s a simple thing you can do to “stop the bleeding” that’s not all that painful, and actually pretty easy: getting your loan pre-approved before you go to purchase a car. You can do this through your bank, your credit union, or you can even get pre-approval online. A recent article by Marketwatch.com details five reasons doing so can help you.
First, you’re identifying any credit problems ahead of time, so there won’t be any surprises and you can address any issues that come up.
Second, you can design loan terms that specifically fit your budget. You know what you can afford and you can use a car loan calculator to see what down payments, loan periods, and monthly payments work best for you.
Third, doing so shows the salesperson that you’re an informed buyer and gives you more control.
Fourth, it simplifies the negotiation process because you’re a cash buyer and can focus on the price of the car. In doing so, you’re not getting caught up in discussions about the monthly payments, which can often lead to higher overall costs for you, as dealers will adjust numbers to fit your monthly payments.
Fifth, being pre-approved forces the dealer to come up with a better rate. They have access to very low financing rates, oftentimes better than you can get on your own. If they want to get you into a car that’s an upgrade from what you were considering, a lower rate may make the numbers work.
This is a great approach for anyone looking to buy a car. When you get pre-approved for a car loan, you go into the process more informed, knowing what you want to spend, and with better negotiating power. For a costly item like this, it’s worth that little bit of extra effort. Until next time, enjoy.
