What Is Pre-Approved Financing? | Ramsey Motor Company

Essentially pre-approved financing means you have already done your homework and have found a lender who is willing to loan you the money you need to buy your next new or used vehicle. Taking this simple step can and usually does take a lot of the hassle out of buying your next vehicle. Since you already have the loan set up, all you have to worry about is finding the perfect vehicle that meets your budget.

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The Basics of Pre-Approved Financing

When you start looking at pre-approved financing, you should be aware that it pays to take your time and shop around for the best possible terms and interest rates. It helps if you already know what your credit score looks like. Remember the lower your credit score is, the easier it will be to find financing at lower interest rates. In most cases, the lender will tell you the maximum amount they are willing to finance along with the terms and interest rate of your loan. They may ask you to provide the year, make, and model of the vehicle you are interested in and may also have the final say regarding whether they approve of the vehicle.

Information About Lenders

For the most part, you will find that most lenders are willing to work with you regarding setting up pre-approved financing. Take time to talk to your bank, credit union, and other lenders who specialize in vehicle loans, this also includes most new and some used car dealerships to help you get the best deal. You can now obtain pre-approval over the phone or online, but be prepared to provide detailed information regarding your income and monthly expenses. Remember, you are will need to sit down with the lender to finalize the paperwork when it comes time to finalize the loan.

Benefits of Pre-Approved Financing

There is nothing better than knowing you already have your financing pre-approved before you set out to shop for your next vehicle. Doing this allows you to focus on the task at hand, finding a new or used vehicle that fits into your loan budget. It also helps you to stay within your budget rather than falling prey to the desire for a vehicle that is outside of your budget and end up with payments that you truly cannot afford. Pre-approved financing lets you shop around for the best rates and terms.

Points to Consider

Unless you have obtained your pre-approved financing from the dealership you plan to buy from, you should never let the salesperson know you have a pre-approved loan until you already have the price of the vehicle locked in. Car dealerships make money when they finance the vehicles they sell and often have extra fees and charges built into their loans. When you have your own financing, the salespeople are less likely to be flexible on the price of the vehicle. By having a pre-approved loan with a set cap, it helps you to avoid getting caught up in the different expensive extras such as service contracts and insurance many dealerships offer.