Chances are you’ve bought a car before. Chances are that you’ve also heard or seen the term “pre-approval” on multiple platforms (commercials, billboards, flyers, etc.). Have you ever wondered how a pre-approval actually works and how it can help you? Well, here is how getting pre-approved may be able to help!
One of the biggest benefits to getting pre-approved is to help you set a realistic budget when searching for a car. Keep in mind that whatever you are approved for, a portion of that amount will need to be set aside for taxes and fees.
Another way that a pre-approval can help with the car buying experience is that it provides buying power for you while on the car sale lot. When you are shopping for a car, a salesperson might try to get you to spend more than you’re planning. When you are pre-approved, your budget knowledge will help you be able to stand up to a hard sales pitch. When you're pre-approved you can tell the dealer what you are looking for and what you can spend. The dealer will either find a car for you or inform you that they don’t have what you’re looking for, which allows you to move on to the next dealer.
If you keep these things in mind when purchasing a vehicle, you will have more confidence on the car sale lot, and you will leave with a monthly payment that you are comfortable with. The more knowledge you have before getting into this process, the better you should be able to come out of it, and maybe with an even better vehicle than expected!
Pre-Approval is subject to credit approval with American 1. If you are not able to get pre-approved, we have a team of Certified Financial Coaches who are available to help you with budgeting, investment questions, debt reduction, and any other financial topic our members need help with - for free! If you aren’t a member of American 1, join today!