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Why It's Critical To Have An Auto Loan Before Car Shopping
By EchoBay Loans Staff Writer

With the exception of buying a home, buying a vehicle is one of the largest purchases you will ever make. Just as it is wise to be pre-qualified for a home, it is wise to do the same when you are buying a car. There are many advantages to being pre-qualified for an auto loan before you ever arrive at the dealership. Whether your lender has just approved you or you have a check in hand for your car loan amount, it is the smart way to shop for a car.

It gives you the upper hand
When you are already pre-qualified for your car loan, you have the upper hand when it comes to getting the best deal. Because the seller (whether it is a car dealer or a private party) knows you are pre-qualified, they know you are serious if they can give you the best deal on the car.
It is important to use this to your advantage and let them know you are prepared to buy today if the price is right. Of course, you can always remind them that you can take your pre-approval to their competitor if they aren't willing to make the deal right.

This also helps you to avoid the dreaded running back and forth between the salesman and the manager. Without a pre-approved auto loan, your salesman will be running to the sales manager every five minutes to see if they can get you a better deal. It's classic for the salesman to appear to be on your side united against the sales manager to get you the best deal. Of course, you know this isn't the case. When you walk into the dealership with an approval in hand, you can avoid this game. It also keeps the salesman from adding on additional dealer fees after you have agreed on a price.

You can avoid finance manager's mark-ups on interest rates
Many times the stressful part of buying a car is dealing with the finance manager. Some dealerships will appear to give you a better deal on the price of the car and then try to make up the difference with the cost of the car loan. By marking up the interest rate, the dealer is padding the bottom line. It is also easy for the finance manager to begin tacking on additional fees to pad the deal for the dealership. With a pre-approved loan, you can avoid this all together. The terms of your auto loan have already been set and you will not have to worry about what the finance manager is adding on to help their own pockets.

You know ahead of time exactly what you can afford
When you are pre-approved for a car loan, it helps when you hit the lot of the car dealer. By knowing beforehand what you can afford, you can avoid the disappointment of getting your heart set on a dream car that is out of reach. It is much easier to narrow your search for a car when you have a pre-set amount.

This also helps when you are looking at options to be added to your car. If you cannot live without leather seats and all of the extras, you will know ahead of time that you need to look in a price range that allows room to add on these extras. It can make the car shopping experience much less stressful.

It gives you the chance to fix any errors on your credit report
When you get pre-approved for an auto loan, your credit is pulled before you ever enter the dealership's showroom. If there happen to be any errors on your credit report, this gives you the chance to fix them before you go to buy your car. Imagine your embarrassment if you found the perfect car, negotiated the deal and were sitting in the finance manager's office only to be told there were errors on your credit report which resulted in a very high interest rate or not being able to finance an auto loan at all. With a pre-approved loan, you can avoid this type of situation.

As you can see, there are many advantages to being pre-approved for a car loan before you begin shopping for a new car. It is an important step to take that will make your car buying experience a much more pleasant one. It allows you to focus on getting the best car for your money and your needs.


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