When you want to buy a car, you might use a pre-approved loan to pay for the vehicle. However, these loans have their ups and downs. Use the tips below to understand what you get out of a pre-approved loan. Also, consider the downside of a loan like this so you know what you are getting.
You Know You Can Finance The Car
Pre-approved auto loans let you know that you can afford a car that is a certain price. The auto loan company will give you a letter that shows you have been approved, or the dealership can contact the broker who was assigned to your loan.
You Know The Terms Of The Loan Before Going To The Dealer
When you get a pre-approved loan, you know the terms of the loan before visiting the dealership. People who get financing from the dealership might not know what they are getting, and you get some peace of mind out of the deal. However, you might not like the terms of the loan. Some pre-approved loans are very expensive, and they might have high interest rates that are difficult to deal with.
Pre-Approved Loans Do Not Qualify For Deals At The Dealership
Most dealers offer deals to their customers, but those deals are contingent on getting a loan from one of the dealership’s partners. Because of this, you might pay too much for the car. You should consider all your options when buying a car, and your pre-approved loan removes some good options the dealer might offer you.
Every Loan Company Offers A Different Level Of Customer Service
If you are working with a loan company you are not familiar with, their customer service might not be very good. Plus, you might end up working with a loan company that your dealer does not know. When you use the lenders that the dealer uses, you get a much higher level of customer service.
You should research customer service for all the loan companies you have tried. If you get a pre-approved loan, you need to know that the company does the right thing for its customers.
Pre-Approved Loans Expire
You might spend too long shopping for a car, and the offer from the lender might expire. When your loan offer expires, it might change if you need to apply again. You may want to apply with a dealer because their offers do not expire so quickly. If you are concerned about how long it will take to shop for the car, you should use this time to apply for many different loans. You will have more time to compare prices, and you can save money that you might have lost if you took only the first offer.
Conclusion
When you want to get a pre-approved car loan, you should consider all the options you have. You can show the dealership what sort of car you can afford, but you might get a high interest rate or poor terms. You might not qualify for deals that the dealership offers, and you should consider which deal is better. Some people need to take the pre-approved loan, and others need to make a deal with the dealership. Consider all your options before making a decision, but you might get better customer service if you know how much you can afford.
