4 Reasons You Should be Approved for a Loan BEFORE Car Shopping
We know you’re excited to get out there and shop for a car! Whether this is your first car or your tenth, the excitement of bringing home a new, or new-to-you vehicle really is one of life’s more pleasurable moments.
Yet to make the day you drive that car off the lot even better, we highly recommend that you make sure you’re pre-approved for a car loan before you start talking to car salespeople.
Here are four reasons why:
- You’ll know exactly how much you can really pay for a car.
Walking on to a dealership not knowing how much you can is a sure way to end up spending more than you can afford. How? A savvy salesperson will work with you to “make sure the monthly payments are affordable,” which could well result in you purchasing a much more expensive car and also paying more for it overall it will mean you’d need a longer loan in order to keep the monthly payments “affordable.” And a longer loan means a lot more money spent in interest charges.
- Many dealers offer in-house refinancing and having outside pre-approval can give you leverage.
Many auto dealerships offer loans to people who buy cars from them (including the PAACO Automotive Group). Knowing that you have been pre-approved for a loan away from the dealership could – although it’s definitely not guaranteed – result in the auto dealership presenting you with a better deal. (They want you to take out a loan with them because they get the interest on the loan, not the bank/credit union, etc.)
- You’ll get a better interest rate.
Auto dealerships can – and do – help people with bad credit. But if you’re asking for a loan to purchase a car you’ve just agreed to buy at the dealer’s lot, you’re something of a “captive” to the interest rate the dealership will give you. They know this and they therefore have no real incentive to give you the best rate for which you qualify.
- The car-buying experience will go faster and be easier.
Because you’ll know exactly how much you can afford, you’ll have to look only for cars in your price range. You won’t be tempted by a salesperson to purchase a more expensive car.
You’ll also have more negotiation power because the salesperson knows your loan limit and he may cut you a better deal on a car in order to get you to buy it.
If you live in the greater Dallas region and are in the market for a great used car, don’t forget to visit the PAACO location nearest you. For more information, contact us at 877-810-4555.
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