4 REASONS IN FAVOUR OF GETTING A PRE-APPROVED AUTO LOAN
Getting pre-approved for an automotive loan before heading to your nearest dealership can give you an upper hand. It can help you save up money, negotiate with the dealers confidently and find clarity on your buyer’s journey. It does not take a lot of hard work to apply for a car loan in advance before testing the waters. You simply have to submit an application to the bank in question who would go on to do a background check of your credit history. This will give you an insight into how much money you are eligible to take and the rate of interest which gets decided by your credit profile.
Let’s dive into the four legit advantages that a pre-approved loan can offer –
- CLARITY ON THE BUDGET – Having a clear idea of the upper cap of your loan sets the tone for the rest of the mini-decisions to be made along the course of the journey. This will prevent from overspending.
However, as a result of having little to no room for going past your set budget, you may end up missing out on the car you were fancying. On the flip side, it is always to cut your cloth according to your need. You can never go wrong with pre-approved auto loans since there is always taxes and fees to account for in a purchase and a preapproved loan provides just that.
- HAVE AN EDGE OVER DEALER MARKUPS – A pre-approved auto loan sets a cut-off for the maximum amount of money you can afford to spend. A markup is the difference between the base price and the final selling price of a commodity. When you do not have a pre-sanctioned loan, the dealers can charge 1-2 % (Annual Percentage Rate) higher than the actual rate of interest that the bank would have charged you. It will be hard for you to call it out since it will be inclusive of the charges. The difference between the bank rates and the dealer’s rates is the dealer’s profit. You will not be able to spot the difference unless your loan is pre-approved where the dealer cannot rig the rates as a result of having tie-ups with banks and credit unions.
- BE AT A POSITION OF AUTHORITY WHILE NEGOTIATING – When you go to a dealer with a pre-approved auto loan, the dealer has the option of either accepting it or proposing a better offer. If the dealer is able to offer an APR lesser than your bank rates, you can end up saving money off your pre-approved auto loan, that is, on top of your borrowing costs.
- PREVENT BEING UPSOLD – When you have pre-approval under your belt, dealers will try to upsell you. The add-ons like rustproofing and roof racks can be bought from a local vendor where it comes for a cheaper price. These add-ons that the dealers provide add up to a huge amount and can leave you empty-handed monetarily. Always remember to negotiate for a reasonable price.