Why It’s Smart to Get Pre-Approved for an Auto Loan
There’s more to getting a good deal on a vehicle than negotiating the price. Obtaining an auto loan from San Francisco Federal Credit Union will help you get a great interest rate and save on fees. Pre-approval starts the loan application process, and there are several important benefits of pre-approved auto loans to consider that could help you save money and time.
Pre-Approval Increases Your Bargaining Power
When you show a car dealer that you are pre-approved for an auto loan, it tells that person you are a serious buyer. The dealer may be more willing to help you find the perfect vehicle with pre-approval instead of thinking you are someone who is just window shopping.
Being pre-approved for an auto loan may also help you negotiate a great price. Because your lender has pre-approved you for a certain loan amount, you may be able to use that as a bargaining tool to purchase a more expensive vehicle for a lower price.
A strategy that some car dealers use is to negotiate your monthly payment instead of the vehicle price. This allows them to sell you a more expensive car as long as they can get your monthly payments within a certain amount.
However, pre-approval allows you to negotiate the price of the vehicle instead of the monthly payment. This ensures you are getting the best possible deal.
Pre-Approval Helps You Stick to Your Budget
If you aren’t pre-approved for an auto loan, you may spend a lot of time shopping for vehicles that are outside of your budget. Buying a more expensive vehicle than you can afford could cause financial problems. If you miss any of your monthly payments, it could also harm your credit score or even result in the repossession of the vehicle.
With auto loan pre-approval, you’ll know the limit on how much you can spend. This will help you buy a vehicle that is within your budget. It will also help you save time when shopping. By knowing how much you can spend, you can focus your search on vehicles that you can realistically afford.
Pre-Approved Auto Loans Help You Get a Great Interest Rate
If you obtain dealer-arranged financing, you may not get the best interest rate. Comparing lenders’ rates before you start looking for a vehicle allows you to apply for pre-approval with the lender that has the best rate and the lowest fees.
If you go with dealer-arranged financing, however, you may not have the option to compare rates. You may have to go with whatever the dealer offers you.
Pre-Approval Helps You Avoid Hidden Costs
With dealer-arranged financing, you may pay more for your auto loan than if you had obtained pre-approval from us. Many dealers either charge a fee for arranging the financing or add a premium to the interest that a lender charges.
If you obtain pre-approval from a San Francisco Federal Credit Union you can avoid these unnecessary charges. This will save you money and also give you peace of mind knowing that you got the best possible deal on your loan.
Pre-Approval Helps You Avoid Dealer Upsells
Some dealers may try to sell you extra things that you don’t want or need when buying a vehicle. A few common upsells include:
- Paint sealant
- Wheel upgrades
- Fabric protection
- Extended warranties
- Dealer-added sunroof
If you are pre-approved for an auto loan, it may give you an easy way to decline dealer extras. You can simply tell the dealer that the loan amount you are pre-approved for isn’t enough to cover those additional features.
Pre-Approval Streamlines the Vehicle Buying Process
Once you’ve found a vehicle you would like to buy and you’ve negotiated a price with the dealer, you may have to spend additional time at the dealership to arrange financing and complete the paperwork.
If you’re pre-approved for a vehicle loan, you may be able to shorten your time at the dealership. Because you have already arranged vehicle financing, the buying process is streamlined and more efficient. This helps eliminate a lot of the hassle and stress that many people experience when buying vehicles.
How to Get Pre-Approved for an Auto Loan
Obtaining pre-approval for an auto loan is a simple process, and San Francisco Federal Credit Union gives you the option of applying in person, by phone, or online. Our pre-approval offer is good for 60 days (others are only good for 30 days) and the process can be completed in three simple steps:
1. Apply in person or online
2. Agree to the loan terms and conditions
3. Obtain a check from your lender to purchase the vehicle
It’s important to keep in mind that a hard credit check will be done when you apply for an auto loan pre-approval. Hard credit checks are done whenever you apply for loans, credit cards, or other forms of credit. A hard credit check will cause your credit score to dip a small amount, potentially for up to 12 months.
Soft credit checks, in comparison, don’t affect your credit score. Soft credit checks are done for things that don’t involve obtaining credit. They may be done as part of a background check for a job, when applying to rent an apartment, or for other reasons.
When applying for auto loan pre-approval, it’s essential to gather all of the information you’ll need beforehand because this will prevent delays. Information you may need includes:
- Social security number
- How much you want to borrow
- Income and employment information
- How long you want to finance the loan
- Vehicle trade-in information (if applicable)
Auto Loans With San Francisco Federal Credit Union
If you’re thinking about buying a vehicle, San Francisco Federal Credit Union offers pre-approved auto loans with competitive interest rates, no payments for 90 days, and flexible loan terms of up to 96 months. You may also be able to finance up to 100% of the purchase price.
Click on the following link to learn more about our auto loans.