Sure you can get financing from your local dealer when you go and buy the car, but you should get financing elsewhere from before you head on over to the dealership. There are several reasons why auto industry experts recommend that buyers get a preapproved auto loan before shopping, and here are five of them:
You can save money
Savings are the key advantage offered by a preapproved auto loan. When you get preapproval, you give yourself the opportunity to reduce the overall cost of the purchase. You will understand how a preapproved auto loan saves you money by reading the other reasons.
You determine how much you can afford
When you secure a preapproved auto loan, you will determine how much lenders are willing to lend you. The rates advertised never applies to all—you may or may not qualify for them. By assessing your credit and income, among others, lenders can come up with the numbers that will tell you how much loan you qualify for. When you have an idea of how much loan lenders are willing to give you, you can narrow down your auto choices to only those you can truly afford. Thus, you wouldn’t be put in a situation where you are stuck with an auto loan you can barely afford to repay.
You know the price range
When you seek auto loan preapproval from a number of lenders, you will discover the price range of the loan you are planning to get. Different lenders are expected to have different offers, and you will get a range once you get the figures from them. When you are aware of how much a vehicle may cost, you will not be tricked into paying more. You can stand firm on a reasonable price and use it as leverage when negotiating with the car salesman.
You can negotiate better
Speaking of negotiating, you will be in a better position to negotiate once you are in the dealership if you shop like a cash buyer.
Dealers earn money whenever they arrange an auto loan for a customer. In order to pocket even more money, they will confuse the buyer by directing his or her attention to just one component of the loan (the monthly payment) and manipulating the others in the negotiation. If you already have a preapproved auto loan, there is no need to discuss monthly payments. You can focus on negotiating on the most important thing: the vehicle’s purchase price.
You avoid being played by the dealer
When you get preapproval, you arrange the payment beforehand. You and a lender already have an agreement. The payment is no longer the concern of the dealer. Hence, you will be spared the tricks that the dealer plays on those who obtain financing through them. It will be tougher for them to squeeze more money out of you.
Your transaction must be quick and easy—with the financing out of the way, the car salesman can’t delay the process by consulting with the sales manager. In the end, it should be about whether the dealer is willing to sell you the vehicle at your price.
Where can you get auto loan preapproval? You may get a preapproved auto loan from your local bank or credit union. You also have the option to get financing from online lenders like Oklahoma City Auto Approval Center.