What it means to get pre-approved:
You submit an application to a lender and they review your credit. They let you know how much they are willing to give you, at what rate and what your loan terms look like.
What are the benefits of getting a pre-approved car loan?
You get information and bargaining power, which makes negotiation easier. By getting a pre-approved car loan you can negotiate better deals with car dealerships.
You can figure out exactly how much you can borrow. You have a better idea of how much you can afford to borrow, making it easier for you to set a budget.
You can understand the costs better. Getting a pre-approved car loan helps you get a better understanding of what costs are involved in buying a car and the types of interest you can expect to pay.
You can get a quote that’s more customised to you and your situation. You can get a finance deal that is best-suited to your financial situation.
If you can’t afford the pre-approved rate, consider your options:
You could make a larger down payment. You could always work on saving more so that you can afford a bigger deposit. This puts you in a position of power and you can negotiate better deals.
You could offer more collateral. If you’re applying for a secured loan, you could always offer other assets which are more valuable.
Use a co-signer. Using a co-signer improves your chances of being approved for a car loan. This individual must have a good credit record.
Use a longer loan term. You could always tailor your loan solution to suit your financial needs.
Work on building your credit. Nothing beats working on improving your credit rating. Having excellent credit puts you in a good position.