One of the most stressful parts of applying for a car loan is the approval process - waiting for a response from your lender on whether they’ll lend you the money or not.
If this is your final step in the car loan process, it can be a stressful, anxiety-filled experience.
After all, you’ve found your car, you’ve filled in your application - but is it enough for the lender?
With car loan pre-approval, you can avoid this unnecessary stress entirely. Here’s how it works and how you can use it to your advantage.
Car loan pre-approval is an optional part of the loan application process, where a lender agrees to lend you a certain amount of money to buy a car without formalising the loan agreement or conducting a hard credit check.
When you ask for pre-approval from a lender, you’ll generally need to provide the same information as when applying - identity, employment and financial verification - and allow the lender to perform a soft credit check.
Once you have obtained pre-approval, you will have a limited amount of time to arrange for the purchase of your vehicle and submit an official loan application. Your lender will then need to conduct a hard credit check and receive an invoice from the dealership or private seller to release the funds.
Car loan pre-approval might just seem like a soft promise from a lender to give you the money, but the purchasing power you’ll receive from pre-approval goes far beyond that.
Car loan pre-approval helps:
Likewise, there’s no obligation for you to apply just because you’ve got pre-approval, which means there’s zero cost or worry involved if you decide to change your mind.
As we looked at above, the double-edged sword of pre-approval is that it is only a conditional approval at the time.
This means that, should your credit score change, or you apply for a different loan amount, the lender is under no obligation to approve your loan.
You may also find that seeking pre-approval limits your options. Not every lender may offer pre-approval, and some lenders may even insist on a hard credit check to do so.
We’ll show you the best deals we can find and, just like pre-approval, there’s no obligation or impact on your credit score. If you’re ready to experience the power of car loan pre-approval and see which lenders can offer you a car loan, speak to our Money Matchmaker™ today.
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
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