Getting an auto loan pre-approval is essential when planning to buy a car. The process helps you understand the vehicle you can afford, gives you a clue about where to find an auto loan with the best rates and increases your negotiation power at the dealership. But how does auto loan pre-approval work, and what do you need to complete the process?
Read this post from Putnam Volvo Cars Burlingame, an award-winning dealership, to understand everything regarding pre-approval.
What is a Pre-Approved Car Loan?
A pre-approved car loan is an amount a bank or credit union could offer if you borrow money to buy a vehicle. In pre-approval, your lender discloses the possible loan limit, interest rates, and other loan terms.
Primarily, you should seek the service from your current bank or credit union since the institutions have your updated financial records. With your current bank, the application process is easy, and the loan limit you get is accurate.
However, you can scout for higher loan limits, low rates, and reasonable loan terms from other reputable credit unions or banks.
What Do You Need to Get Pre-Approved For a Car Loan?
Your bank or credit union evaluates your credit history, income, current debts, and employment to determine the amount you can get as an auto loan. Therefore, you should be ready with updated financial and employment records when seeking pre-approval.
Besides the records, you must:
- Be aged 18+
- Be a United States resident
- Have social security number
- Show proof of employment or stable income
- Present your tax documents for review
Should You Get Pre-Qualified Instead of Pre-Approved?
In pre-qualification, financial providers calculate your creditworthiness based on superficial financial reports. After the brief financial check, the financial provider gives a range of the amount you could get if you borrowed.
Unlike pre-approval, pre-qualification does not provide the accurate loan limit you would get from the lender. For that reason, pre-qualification would be ideal for individuals who want a rough estimate of their creditworthiness.
In pre-approval, your financial service provider uses your personal, financial, and credit reports to determine the amount you would get if you took out a loan. The loan limit, rates, and terms of a pre-approval process are almost precise to what you would get if you took a loan.
Therefore, the pre-approval process is for individuals looking for a suitable car loan to purchase a car.
How to Get a Pre-approved Car Loan
Getting a car loan pre-approval is pretty straightforward. You need to put your credit reports in order, select the lenders to try out, and initiate the pre-approval process online, by phone, or at the lender's offices. Here is how to get started:
- Verify if your credit report is right. Lenders use your credit report to determine loan limits and loan terms. Before initiating a pre-approval car loan, review your credit report to see if it is accurate. If it is not, fix the issues before you proceed to get the loan pre-approval. That way, your banking institution will use an accurate credit score to determine your creditworthiness.
- Identify the most appropriate lenders. Loan rates and regulations differ from one lender to another. Therefore, if you want the best deal, scout around for loan providers with a good reputation, excellent customer support, reasonable loan terms, and quick approval processes. Some top choices to consider include PenFed Credit Union, Bank of America, Auto Approve, and Consumer Credit Union.
- Apply for pre-approval. After identifying top lenders, get a pre-approval car loan from each, and then narrow it down to one that offers a reasonable loan limit with better loan terms. For pre-approval, apply online, call the lender, or visit them in person. Note that the auto loan pre-approval process is similar to an actual loan application.
Volvo Finance & Lease Options in the Bay Area
If unsatisfied with the auto loan pre-approval from banks and credit unions, do not give up on buying your dream car. Putnam Volvo Cars Burlingame can finance your car at fair rates and reasonable payment periods.
We help you get financing that aligns with your financial muscle and payment terms that make the most sense for your situation. What's more? Our application process is straightforward. You can fill out our online loan form, and our experts will get back to you.
Test Drive a New Luxury Volvo in Burlingame Today
An auto loan pre-approval helps you determine the car you can afford and identify a lender with great loan terms. Find your latest credit report, scout for reputable lenders, apply for a pre-approval, and pick a lender with reasonable loan terms to get the pre-approval.
Alternatively, you can get financing from our company Putnam Volvo Cars Burlingame. Our rates are low, the loan application process is simple, and the payment period can go up to 75 months. Contact us to ask about our financing or schedule a test drive for the Volvo of your dreams.
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