Pre-Approval

Pre-approval is the process of getting a loan approved by a lender before you start shopping for a car. This gives you significant advantages in the car buying process.

How Pre-Approval Works:

1. Apply with your bank, credit union, or online lender
2. Lender checks your credit and finances
3. You receive a loan commitment letter with approved amount and rate
4. Shop for cars within your approved budget
5. Use pre-approval as leverage or fallback

Benefits of Pre-Approval:

• Negotiating Power: You're a cash buyer, not dependent on dealer financing
• Budget Clarity: Know exactly how much you can spend
• Rate Shopping: Compare dealer rates to your pre-approval rate
• Faster Process: Skip the financing step at the dealership
• Better Deals: Dealers may offer better prices to cash buyers

Pre-Approval vs. Pre-Qualification:

• Pre-Qualification: Soft credit check, estimated rates (not binding)
• Pre-Approval: Hard credit check, firm rates and terms (binding)

Best Practices:

• Get pre-approved from multiple lenders
• Shop within 30 days to avoid multiple credit checks
• Use pre-approval as leverage, not a requirement
• Still consider dealer financing if they offer better rates