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Why Pre-Approved Auto Loans Give You an Edge

Pre-approval is a game-changer for car buyers, and here are some of the top reasons why. Many buyers wait until they’ve picked out a vehicle before securing financing, which can lead to unexpected hurdles and last-minute financial surprises. Get ahead of the game with a pre-approved auto loan, and step into the dealership with confidence.

1. Have stronger negotiating power

When you walk into a dealership with a pre-approved loan, the dealership knows that you are a serious and informed shopper. With pre-approval, you’ve essentially transformed into a cash buyer. Knowing exactly what you can spend will make negotiating a better sales price easier—both parties want a successful sale.

If you’re standing in the lot surrounded by shiny new car models, it can be easy to get sucked into paying outside your budget. Dealerships may steer you towards an attractive monthly rate, but it will come with extended terms. Considering how much cars depreciate yearly, you’ll want the shortest loan terms possible. With a pre-approved loan, you can focus on the “out-the-door” price instead of a deceiving monthly rate. With pre-approval, you can also determine whether the dealer offers you a fair rate.

2. Avoid unnecessary dealership add-ons and upsells

Coming in with a pre-approved loan allows you to set your foot down and deflect add-ons and extended warranty offers you don’t want. Oftentimes after choosing your vehicle, the salesperson at the dealership won’t stop there. They may suggest things like paint and fabric protection, supplemental alarm systems, or tire packages.

These can seem like a good deal upfront, but you’ll want to consider if you’ll actually find use for them. Additionally, keep in mind that some add-ons like window tinting can even be more cost-effective to purchase separately at a local shop.

When you’re signing papers in the dealer’s finance office, you can turn down unnecessary add-ons by simply saying: “This is the amount I’m pre-approved for, and I’m not going to go over it.”

3. Faster, more streamlined buying process

Pre-approval streamlines the entire process. By completing the paperwork and financial verification in advance, finalizing the loan at the dealership becomes much quicker. By avoiding additional paperwork or last-minute credit checks, you can experience a faster, smoother buying experience.

Having a pre-approved loan in your pocket can also narrow down your options and make it easier to decide on a vehicle. By knowing what you can afford, you’ll avoid looking at cars that are out of your budget. You can easily remove vehicles from the running by keeping your budgeted monthly payment in mind.

4. Get a clear picture of your financial health

Getting a pre-approved auto loan enables you to identify credit issues beforehand. The pre-approval process will inform you of your credit standing and allow you the opportunity to improve your credit score before you’re ready to walk away

While having bad credit won’t prevent you from finding a car loan, it can certainly increase interest rates and fees. You’ll want to present yourself as someone who is more likely to repay a loan on time and, therefore, less of a risk to the lender. The better your credit score, the better the rates and terms you’ll receive. To learn more, read our blog post about improving your credit score for some action items you can take today.

Get a pre-approved auto loan with MIT Federal Credit Union

When you get an auto loan with us, you’ll work with people who know you and your financial reality. With our pressure-free guidance, we’ll get you on the road with the ride you want at the rate and terms you love. Check out our auto loan rates or contact us at a branch to get started today.

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