Did you hesitate to buy a car after confinement? Well, maybe it is time to think about getting pre-approved for a car loan.
Not only could this speed up the process of buying a new or used vehicle, but it can give you the peace of mind that you have already been approved for a loan from an auto loan provider.
Moreover, it can give you a better idea of the price of the cars you can choose as well as the distance you have to travel to negotiate the price.
But what is auto loan pre-approval?
Pre-approval for a car loan occurs when a lender agrees to lend you money conditionally before you buy a vehicle.
Note the word “conditionally”. This means that the loan is not frozen, but the lender sets conditions in order to fully approve the loan for the purchase of a car. Terms can include things like loan limits and vehicle types.
It’s also important to remember that pre-approvals only last a certain amount of time before they expire – in Australia, this typically lasts between one and three months.
So with that in mind, if you are planning to buy a car after foreclosure, it may be a good idea to take a look online and see what is available in your price range right now. This way you will have your research done and you won’t waste time once you have been pre-approved.
Do pre-approvals affect credit score?
Like all loans, pre-approvals can affect your credit score. The golden rule when applying for a loan or pre-approval is not to make several requests at the same time. Other lenders and tax reporting agencies may view this as negative.
Remember that in order to get pre-approved on a car loan, you must have a good credit rating, as this gives a potential lender an indication that you are a trustworthy borrower. So, if your credit rating is not good right now, it may be worth focusing on repair by paying off your current debts, before looking for other forms of credit.
So wait, does pre-approval guarantee an auto loan?
As mentioned, in the event that a borrower receives pre-approval, there is no collateral for car loan.
Some of the reasons why someone Maybe not receive a loan after prior approval:
- The pre-approval period has expired
- The car they are looking to buy is too expensive (above the pre-approved loan amount)
- The lender does not cover a particular type of vehicle
How to apply for an auto loan pre-approval?
First of all, you will need to find a lender who offers pre-approval, as not everyone does.
Once you have, like a normal auto loan application, the lender will assess your finances and check things like your credit history, transaction and savings accounts, and employment status. This way the lender will be able to determine how much they think you can afford to repay over the life of the loan.
If you receive pre-approval for a car loan, then you will receive funds to purchase a vehicle.
Ready to start comparing auto loans? Take a look at these options or head over to our car loan platform for even more!