Getting Pre-Approved For a Car Loan is a Smart Move

Buying a car can be a very expensive, but necessary, purchase, which is why many people choose to take out an auto loan. When you head to the dealer with the intention of finding a car and a car loan, you may have a harder time negotiating and little idea as to whether the final loan terms the dealership offers you are the best you can get. Given that a car is a very important purchase, you should take the time to research before you head to the dealer. Look at the type of car you want and  the average price.  Getting preapproved for a car loan is a much better choice than waiting until you get to the dealership for financing.

The AutoLink -- Car Buying Service, on our website, wkfcu.org/Loans/AutoLink, is great place to start doing your research from the comfort of your home. Get the information you need about the vehicle you are interested in before you head to the dealership.

What is a pre-approved car loan?

With a preapproved car loan, from your credit union to borrow up to a certain amount before you even go to a car lot and start shopping for your new car, rather than the other way around. This gives you tons of flexibility when shopping. 

For an auto loan preapproval, we will do a hard pull on your credit. Don’t worry though — this has to happen if you need a car loan. Plus, you have a window of 14 days in which to shop around for an auto loan without multiple hard pulls impacting your credit. Some credit-scoring methods may even allow up to a 45-day window

Benefits of auto loan pre approval

LESS STRESSBefore you even step foot in a dealership, you already know what most people stress out about: your down payment and your maximum monthly payment. Because your auto loan preapproval is set, you know pretty well how much you’ll pay and when, as long as you stick at or below your preapproval amount.

FEWER ADD-ONSDealers like to convince you to buy add-ons, such as extended warranty, GAP insurance, appearance packages and the like. If the salesperson tries to sell you things other than a car — or upgrade you to a more expensive car — you can feel more confident declining the offer because you know how much you can comfortably spend.

Getting preapproved is often the best option when you’re trying to finance a car because it can help you get a lower interest rate on your loan. You know the auto loan rate you deserve without the dealership acting as a middleman and upping your APR. Dealerships can and often do raise customers’ APRs, but they’re not likely to convince you to take a higher rate if you have a lower rate elsewhere. In fact, if the dealership wants to finance your car, they’ll need to provide a better rate than your preapproval.

High-interest car loans are like a double-edged sword because while your car is depreciating in value as you use it, you also have to spend several years paying back your loan, which is why it’s so important to secure the lowest rate possible.

You can cut to the chase when you know what car you’re looking for and at what price, and you aren’t relying on the dealer to find a loan for you. You spend less time negotiating and less time overall when you have a car preapproval.

When you have a preapproval from WKFCU directly, you can go to any dealer. This helps you negotiate the price of the car more effectively because you easily can take your business elsewhere if your requirements are not met.

Requirements For a Car Loan Preapproval

Here are a few basic requirements you need to consider.

  • Proof of identity: You’ll need to provide proof of identity. Usually, a driver’s license will suffice.
  • Minimum credit score: Know that you’ll usually need to have at least a fair credit score (600+) to qualify for a car loan, and typically a very good credit score (720 or higher ) to get the very best rates. You can check your credit report for free each year by going to AnnualCreditReport.com.
  • Income requirements: You will need to provide your gross monthly income or salary. If you have other    sources of income, such as retirement income, disability, alimony or child support, you will need to disclose that information as well in your application. You may be asked to provide proof of income, like a pay stub, bank statements or a copy of your tax returns, if you’re self-employed.

Shopping with a preapproved auto loan

Once you get preapproved for a car loan, you’ll be able to start shopping for a car that meets your needs and preferences.  We will give you a total amount that you can spend along with the interest rate and repayment terms for your loan. Know that the total amount you can spend includes taxes, titles and fees, so look for a vehicle that costs less than the total amount and ask the dealer for the “out-the-door price.”

Is a preapproved car loan worth it?

Overall, having a car loan preapproval will simplify the car-buying process and shorten the amount of time you have to spend in the finance office.

To Get Pre-Approved for a Vehicle Loan at WKFCU:

  • Fill out a loan application on our website, www.wkfcu.org, we will fax an application to you or pick one up through the drive-thru at either branch.
  • After, you have been approved, we will provide you with a Pre-Approval Letter to take with you when you go to the dealership
  • Be aware that we offer Extended Warranty, GAP Insurance and Credit Disability and Credit Life Insurance. 

WKFCU is working for you and will check your buyers order for any add-ons and charges to be sure you are getting the best deal and nothing has been added without your knowledge. We also register your vehicle and provide the Temporary Tags.

WKFCU will work with all dealerships, including out-of-state dealerships. We are also happy to work with private sellers. We finance new and used vehicles. We look at the over-all value of the vehicle including age and mileage to determine how much we can finance.

If you’re looking to buy a car in the near future, it’s highly recommended that you choose to get preapproved for a car loan at your credit union. 

WKFCU is with you all the way through the whole car-buying process.

Let’s Get It Done in 2021!

(Partially reprinted from lendingtree.com)

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