Car Loan Prequalification: Why It's Vital When Buying a Car

Car Loan Prequalification: Why It's Vital When Buying a Car

Posted on May 19, 2022

We often talk about auto loan prequalification and preapproval. We think they are both useful for knowing what you can borrow and help prepare you for the loan ahead. Speaking specifically about prequalification, what exactly are the specific benefits of car loan prequalification, and why do we recommend it so much?

Our Ohsweken auto loan team explains.

Benefits of Car Loan Prequalification In Ohsweken

Auto loan prequalification is like a quote for a loan. It’s an informal tender process where you provide basic information to a lender or website. In return for that information, you’ll get an estimate of the type of auto loan you could potentially qualify for and what rate you might get.

Remember, it’s just an estimate and isn’t a loan offer. It won’t impact your credit score either, which is a good thing.

So, what are those benefits we talked about?

Know your position

By getting prequalified, you’ll know whether you can borrow the amount you want. You’ll also have an idea of whether you could qualify for the amount and what loan terms might work for you.

You’ll also get an idea of a ballpark interest rate you’ll pay. It’s just an estimate but should be good as a guide.

Know your budget

If you know your position, you’ll have a good idea of your car budget. If you can qualify for the amount you want to borrow, it’s all good. If you don’t, you’ll have an idea whether you need to save more for a down payment, borrow less or both.

These will feed into your car budget. If you prequalify before you begin looking for a car, it should mean you avoid falling in love with something you just cannot afford.

That can be reason enough to get prequalified!

You’re a qualified buyer

If you approach a dealership having been through prequalification, you’re what we refer to as a qualified buyer. That means a buyer who has an idea that they can actually buy the car they are looking at rather than just speculating.

It makes the sales team take you more seriously and means you know exactly what you can spend.

Going into a dealership with a definite budget in mind is the best way to avoid overspending!

Takes the stress out of buying a car

Visiting a dealership and checking out cars can be stressful if you don’t know whether you could afford it or not. We all have a rough idea of whether we could afford a particular car or not.

It’s a different thing entirely to know you can afford it.

Knowing takes all the guesswork out of the process. You’ll know how much you can afford. You’ll know when to stop when it comes to options and you will be under less pressure to be upsold by the sales team.

We’re sure there are other benefits to getting prequalified for an auto loan but we think these are reasons enough!

When you do want to apply for that car loan, don’t make a move without talking to our team first.

When you’re ready for a car lease or loan, get in touch with the Ohsweken auto loan experts at Northway Ford for great deals on auto finance.

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