Should i pre qualify for an auto loan

Preapproval quick facts:. You'll likely get the offered rate your car must also meet the lender's criteria. Pre-qualification means you're likely to receive a loan at a given rate or within a wide range based on limited personal and financial information. It's not an offer to fund you. Pre-qualification quick facts:. Estimated rate may change based on full credit check. You can apply to get preapproval for an auto loan online, over the phone or in person at a bank or credit union.

Aim to get preapproval from two or three lenders in all so you can pick the best interest rate and apply for them all within 14 days. Even though preapproval requires a hard credit pull, if multiple lenders request your report within a short time, they count as one.

Set a realistic budget. Get protection from dealer markups. Strengthen your negotiating position. Get an even better rate and avoid upsells. This gives you the upper hand and puts you in a great position to negotiate the best price with the dealership.

Dealers also know that your pre-approval will be accepted at any other dealership. Even if you do want add-ons like a gap policy or a warranty, these are often cheaper if you finance through a bank or credit union.

No one likes to spend their Saturday afternoon standing around a car dealership. Being pre-approved allows you to skip the dealer financing portion of the negotiations, meaning you get to hit the road in your new ride sooner. If you find a reasonable interest rate through a dealership, you are limited to the inventory they have on hand.

Loan pre-approval, however, comes from a third party institution, which means that you have the freedom to purchase the car from wherever you want. You can start your search for auto-loan pre-approval by checking rates across multiple lenders. These can include local banks, credit unions, and online lenders. Additionally, Garraway says that the following pieces of information are helpful to note on your application:.

This will provide you with the upper hand when it comes to negotiations and help you resist any markups or up sales that a dealer may throw at you. No Cost? No Joke. This Checking Is Free Our free checking account comes with absolutely no monthly fees or minimum balance requirements.

If you plan to buy a new or used car with a loan, applying for prequalification helps you set your budget and get an idea of the long-term cost of the purchase. Prequalification can help you determine whether you might be approved for a loan, and it can give you an estimation of rates you might receive when shopping for a car.

Prequalification can give you a better idea of what your approval odds — and your estimated loan terms — would be once you do submit the final loan application. Getting prequalified can also mean working with a lender.

If you work with a loan officer, this can help you begin a relationship — something that can make the entire purchase process smoother once you find your new ride. Factor in the value of a trade-in if you want to get rid of your current car. Both prequalification and preapproval can give you an idea of estimated loan terms and if you might be approved for a loan from the lender.

In practice, prequalification typically means the lender will use a soft credit inquiry, while preapproval often indicates a hard inquiry. You should check how the lender uses the term to find out what it means for you. Learn more about the difference between preapproved vs.

Getting prequalified for a loan is similar to getting approved for a loan.