Getting an Auto Loan Pre-Approval: Benefits and How to Have It
You've performed your due diligence on your search for a new vehicle. After zeroing in on a specific make and model, you've located an excellent example from a reputable seller and are ready to move forward.
But before signing the papers, you'll probably need to secure financing to pay for your purchase over some time. However, when the usual factors of an auto loan come into play, like interest rate and term length, receiving pre-approval is another aspect that can help you save money.
But how can you get pre-approved for a car loan? And what details do you have to take care of before you apply? Here's our guide on what you need to do and how you can benefit from car loan pre-approval.
How does a pre-approved car loan work?
Applying for pre-approval on an auto loan is simple and offers you many benefits when you're looking to buy a new vehicle. One of the perks of pre-approval is that neither you nor the lender is bound to move forward on the application.
Once you've selected a lender or lenders you'd like to work with, they'll review your credit score and determine the loan amount, interest rate, and terms for which you qualify.
Though lenders perform a hard credit pull on your credit report, this has little to no effect on your score when done within a short period of time. Even when you apply with multiple lenders and several inquiries occur during a small time window, they’re counted as a single event. And if there is an impact on your credit report, it’s often small and temporary.
Once lenders report back, you can decide which offers you the best combination of terms on an auto loan and take further steps toward your purchase.
With all of the complexities related to auto loans, wouldn't it be nice if someone else handled all the details? When you buy a used car from Shift, they work with a network of trusted lenders to find you the best deal on financing.
A pre-approved car loan helps you budget
Buying a vehicle can be an emotional experience. Feelings of excitement, worry, and relief often swirl while you sift through different options as the transaction unfolds.
And it's easy to loosen your inhibitions and spend money you haven't budgeted for when you get caught up in the experience. Maybe an optional shade of paint that costs an extra $500 doesn't seem like a big deal, or that technology package for $1,500 is just too appealing to leave out.
It's understandable to spend more money when purchasing something so desirable. But the problem is after the excitement wears off, you're stuck with a higher monthly payment beyond your financial limit.
That's why getting pre-approved for a car loan helps you stay within the bounds of your financial limits.
When you're pre-approved for a car loan, before you even talk to a seller, you'll know your loan term and interest rate, as well as the monthly payment. With all of this information on hand, you'll know just what you can afford and have an extra tool to stop you from going beyond what you can afford.
Shopping for a car can also be a time-consuming process, especially when it comes to financing. After deciding the make and model you want, where can you go to get a fair price and secure a great deal on financing? Shift makes financing your next car easy. With Shift you can get a pre-approval from their trusted lending network within minutes, so there’s no need to hunt down credit unions or other banks.
Be protected from sales tactics
When you buy your used car from Shift, pre-approved or not, you’ll enjoy our no-pressure environment where you never need to worry about negotiating or aggressive sales tactics. Shift offers you a fair, up-front price based on powerful machine learning algorithms and tons of data.
Getting pre-approved transforms you into a cash buyer, as you have your approved check in hand before signing the papers.
Having your check with you offers several benefits as you move forward with your transaction.
First, it shows you're serious about buying and that you're not just looking to take a test drive or kick the tires. As you browse different vehicles, selecting the ones you like, it’s obvious that you're planning to purchase.
Pre-approval also guards you against salespeople steering you toward models and options outside your price range.
But with your pre-approved check showing a set total you're able to spend, you'll know your financial limit and just what you can afford.
Whether you're shopping used for a truck or an electric car, you can trust Shift for a vehicle that lasts. At Shift, certified mechanics perform 150-point inspections on every vehicle sold, and you get a free Carfax report for the ultimate in transparency. And with Shift's best-in-industry service contracts, you can be sure that it will be running smoothly, mile after mile.
Pre-approval vs. pre-qualification
Though they sound similar, pre-approval and pre-qualification have distinct differences.
You can think of pre-approval as a serious process that gives you concrete information, while pre-qualification is exploring options and involves numbers that may not hold.
With a pre-approved car loan, a lender performs a hard credit pull, going over your finances in detail. Pre-approval allows them to provide you with a solid loan offer, with terms the same or close to what you'll be able to take advantage of when you buy.
But with pre-qualification, financial institutions research your finances in less detail, only doing a soft credit pull and therefore give you estimated loan terms that could change in the future.
When you're ready to buy, pre-approval is a stronger option than pre-qualification because you get valid loan terms and have a legitimate amount of money to spend. You receive less clear information with pre-qualification and can't know if the numbers reflect your actual budget.
When you’re in the market for a reliable used car and need to finance, Shift is with you every step of the way. With Shift it’s easy to get a pre-approval from a trusted network of lenders. You can get pre-approved in minutes from our website.
Auto loan pre-approval in summary
Searching for your next vehicle takes time and attention to detail. Not only do you have to decide on which make and model suits your needs, but you also have to get your financial house to move forward with the purchase.
Receiving pre-approval for an auto loan provides you with accurate numbers for how much you can spend and helps you stick within your budget.
Not only does Shift work with a network of trusted lenders to secure you the best rate on financing, they offer pre-approval on site. This is just another reason why when it’s time to finance your used car purchase, Shift is the way to go.
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All prices are based on vehicle availability and pricing as of
November 29, 2021
Pricing shown is not guaranteed and does not include taxes or other product fees.