If you’re planning to buy a new car, you may have heard of the term pre-approved car loan. This setup offers a lot of benefits. First of all, you will have an idea of what you can afford. Since your financial capacity will be assessed beforehand, you will know how much you can borrow as well as your repayments and car loan rates. Also, it will give you the upper hand when choosing a car and negotiating a deal. By knowing how much you can afford, you can use this as leverage when it comes to discussing the sales price.
Do your research
With so many brokers offering a wide range of services, it is best to compare car loans before signing anything.
How to Get Pre-approved for a Car Loan
When planning to make a major purchase through a loan, make sure to do your research. This holds true when buying a car. With so many brokers offering a wide range of services, it is best to compare car loans before signing anything. Check their car loan rates and other features so you can have the best deal.
Prepare all the necessary documents
Of course, you need to prove that you have the financial capacity to manage your repayments. Other documents are needed as proof of your identity.
Talk to your chosen broker
You can either call them or send your application online. They will assess if you’re eligible for a car loan and recommend the best options for you. They will then help you in setting up the pre-approval to the right lender.
Features of a Pre-approved Car Loan
Here are some of the features to consider when applying for a pre-approved car loan:
Fixed or variable interest rates
If you choose a fixed interest rate, your repayments will be the same every month throughout the duration of the loan. On the other hand, you can take advantage of the flexibility being offered by a car loan with variable interest rates.
Longer loan terms
Car loans with a fixed rate can have a maximum loan term of five years, but there are loan terms that can reach seven years, making repayments more manageable.
Several payment options
Lenders offer different payment options but in general, you can choose from weekly, fortnightly or monthly repayments, depending on what’s manageable for you. You can also use a car loan calculator to give you estimates of your repayments depending on the payment frequency.
Do you have other ideas on car loan comparison and car loan rates? Share your tips in the comments section.