A loan pre-approval is typically obtained from a direct lender, such as a bank or credit union, but it sometimes takes more than a trip down to your local financial institution for a chat with a loan officer. So, is auto loan pre-approval possible? Your credit plays a big part in that decision.
Why Get Pre-Approved?
When you get pre-approved for a car loan, you can look for a vehicle like a cash buyer at a dealership. This gives you the upper hand because you have a budget and interest rate to work with and can focus on getting the most for your money. It also makes negotiating the vehicle price easier, and gives the dealer the chance to try and provide you with a better interest rate through their lenders.
Without a pre-approval, you don’t have as much power to negotiate an interest rate, so you’ll have to accept what they’re willing to do for you. Typically, people with credit scores that fall into the lowest category – considered deep subprime – have the hardest time getting pre-approved, or qualifying in the first place. They'll also typically only qualify for higher interest rates when financing through a dealership.
Deciding Where to Look for Pre-Approval
If you have a good relationship with your bank or credit union, it makes the most sense to start there. Otherwise, knowing where your credit stands can help you decide where to start the process of getting pre-approved for a car loan.
Banks tend to get their money at a lower rate than other lenders, so they can be a good place to look for a lower interest rate loan. However, banks are corporations with shareholders to answer to, and that generally equals higher costs to their customer in the form of fees, which can trickle down into loans. Also, banks tend to only offer loans to people with good credit.
On the other hand, credit unions are member-owned and, as such, have the ability to pass any savings on to their members. This means a credit union member in good standing may be able to get a loan even if their credit isn’t in the best shape.
If you’re struggling with credit issues, and pre-approval doesn’t work, there are still options available for auto financing.
Financing Through a Dealership
When pre-approval or direct lending doesn’t work out, there’s no need to lose hope. Options exist specifically for people whose credit needs a bit of improvement before they’ll be able to qualify for pre-approval. The good news is that subprime lending is a good option for both getting the vehicle you need and improving your credit.
A subprime lender can look deeper into your situation. They can qualify you for financing based on factors other than just your credit score, such as your income, employment, and residence stability. These types of loans typically carry higher interest rates, but every on-time payment you’re able to make will help you build a positive payment history and improve your credit.
Knowing Where to Go
If improving your credit while getting the vehicle for your needs sounds like just the ticket, then Auto Credit Express invites you to climb aboard. We work with an extensive network of special finance dealers that have lending options for people who are struggling with credit that’s gotten off track. There’s no obligation or cost for our service; we simply want to help people get on track for the best possible outcome to their situation. So what are you waiting for? Just fill out our auto loan request to get the process started!