Shopping for a new car is never easy. Typically, some would wish to buy their car on a cash basis and be done with that transaction just once. No one likes having to deal with debts, loans, and a stream of endless payments. Realistically though, it is impossible for most of us. Pooling all the cash required to purchase your dream car may take years before you have the exact amount.
That is why you need to finance your dream car, whether you need it for work, school, or family. It is advisable to get pre-approved for a loan even before you start shopping for the car. As you will discover from this guide, there are many benefits sidelined with getting a car loan pre-approval. However, it is vital to note there is a difference between pre-approval and pre-assessment.
Pre-approval technically means you have approval for a loan. The consent is up to a given limit and for a specified period. The lender must go through your financial information and credit report with this finance structure, thereby giving you the approval offer. Pre-assessment is a soft offer (Often by broker), but this may change once the lender goes through your credit history and other financial documents.
How Do You Get Pre-approved for a Car Loan?
Getting a car loan, boat loan, bike loan, or even personal loan pre-approval is ideal as it saves you some cash. But how do you get pre-approved? Here is what you have to do:
Check your credit
Lenders usually assess your credit history to ascertain whether to pre-approve you for a loan or not. It helps them predict your likeliness to repay the loan. Always check your credit reports before going to a lender such as Oxcel finance for a pre-approval boat loan. Make sure your credit reports are in order, and no information is missing. In case you come across any incorrect information in the reports, you can always dispute.
Gather your crucial information
Securing a bike loan pre-approval requires some information about you. Oxcel finance lenders will ask for personal information such as income, identity, credit history, employment information, and debt payments. After going through your credit reports, collect the crucial information the lender may require like:
- Employment status & income
- 2 form of IDs like Driver License, Medicare, Passport, Proof of age card etc
- Last 3 years living history
- Last 3 years employment history
The pre-approval process has the lender pulling your credit reports, which could generate a hard or soft inquiry on the credit file. Before talking to the lender, check whether they are the type to run a soft or hard inquiry.
You will receive a decision after completion of the application in few minutes. At times the lender may require more time and information to make that decision.
Get several offers
Do not just take the initial offer at the dealership for the car. It is also not advisable to accept the first loan offer without looking at other options. Loan features and guidelines vary; that is why it is recommended to get pre-approval from several lenders and weigh your options. Assess what credit unions, online lenders and banks offer and then compare the offers.
Skipping this process will drive you away from better deals, and you could have probably paid less. Having several options allows you to choose the ideal deal that suits your needs and your budget.
Once you select the suitable pre-approval deal from the lender, you can start shopping. Avoid waiting for too long as these pre-approvals do not last forever. They are valid for about 30 to 60 days only. When you get the dream car you want to purchase, submit a loan application with your dealer, including most of the information used when applying for the pre-approval. That may include specifics about the car like year, model, make VIN and mileage.
Are there vehicles some lenders won’t finance?
Some lenders are pretty strict on the vehicles they finance. Most restrictions are based on how the car will be used, the type of vehicle or the mileage covered.
Benefits of Car Loan Preapproval
Simple buying process
Pre-approved car loans are the most straightforward buying process you will ever come across. With this buying, you do not worry about the interest rates, loans, down payments and all that while shopping for a car. All your focus is on the car purchase process rather than all these other things. Ask your dealer for the “out-of-door” price or the tax, title and license. With these loans, these are the only things to worry you.
Save money, energy and time
Pre-approved bike or car loans save you a lot of time and energy. Without this plan, you would probably be hopping from one finance or insurance office to the other all day long looking for money to finance the car. You would also have to go through various sales pitches, which will waste much of your time and effort. Buying a car is already complicated, and the process need not be more complex than that. Save that travel time to different offices and lots of paperwork by getting yourself a pre-approved personal loan.
With a pre-approved loan, you can have the car of your dreams at any time you wish. With this loan, there is no lengthy verification and documentation process. You will have your car in several hours or a day at most after the lender liaises with the dealer. The disbursement is swift since the lender already knows your creditworthiness and any other relevant financial information they may need about you.
Know the interest rate
Having a pre-approved loan will allow you to know the cost of the loan even before purchasing the car. Understanding the loan interest rate of a vehicle will enable you to calculate the payable quickly. You will plan out your budget well before heading out to the dealer to get it with all that information.
Improves your credit score
Making regular payments for the auto loan rebuilds your credit score. Oxcel finance can help you improve your credit score by reporting to some huge credit reporting agencies. The company works with its clients, and any time you want to talk about loan payments, you can talk to them. They will do everything to enhance your credit score and make you eligible for more loans and financial endeavors.
It helps you set a reasonable budget
Your lender will set a maximum amount for the loan pre-approval. That is usually determined by the credit score, among other factors that the lender has to assess. As you go to get a car, also consider other expenses like taxes and fees. The lender will set a reasonable budget for you, and as you go shopping for a vehicle, make sure it is way below the maximum pre-approved loan by the lender. That will put you around a reasonable and manageable budget.
With a car loan pre-approval, you have many choices to choose from. A considerable amount of money is set as the maximum allows you to look at several cars before deciding which one to take home. With your budget or other asset financing channels, you have a limited range of vehicles, but with pre-approved loans, you can check all the cars that fall under the amount quoted by the lender.
Getting a pre-approved bike or boat loan puts you in a better position to negotiate with the dealer for your vehicle of choice. The dealer will perceive you as a serious buyer, especially if you have a trustworthy and authentic lender like Oxcel finance. Pre-approved loans will allow you to negotiate better deals with the dealer.
Avoiding last-minute surprises
Many people end up frustrated when buying cars in the final stages of the transaction just when they thought they would drive their new ride home. That is because some requirements may come up during these last stages that you may not be able to fulfil. To avoid such surprises, it is advisable to go for pre-approved car loans. With this loan, you are sure to walk out of the dealership with the car you want as long as it is within the budget of the pre-approved loan. There are no unpleasant surprises.
Avoid yo-yo financing and spot delivery scams
Some dealerships will allow the buyer to leave with their dream car without finalizing the financing deal. That is commonly known as spot delivery, where the vehicle is sold ‘on-the-spot.’ Yo-yo financing is where people with poor credit ratings cut a deal on weekends or late nights when banks are not open. After they open, they will review the application and either deny or approve them.
If you left with your new car, but the bank doesn’t approve your loan, you may receive a call from the dealership that the loan was not approved. Reapplying for the loan might mean a substantial down payment or higher interest rates.
Getting pre-approved loans for your car financing could be the most suitable decision you ever made. Make sure you choose a reliable loan broker such as Oxcel finance for the deal. It will save you a lot of time, effort and money.