When looking for a used car, you may come across many vehicles that are in your price range. You can choose to not prequalify for an auto loan car and just make payments on the vehicle each month. This option requires more research on your part as you will be responsible for determining the actual value of the vehicle by checking it against local listings and trade-in values. Here are some of the benefits of prequalifying for a used car loan when looking to purchase one.
Your Credit Score
Your credit score will affect whether or not you can get a loan on a used car. If you have good credit, getting a loan should be fairly straight forward. If your credit score is poor, it may be difficult to get financing at all and be stuck with paying the full price of the vehicle at the dealership. Asking for prequalification on a used car loan can help determine what kind of payment you will have to make and if it is affordable for you. Prequalification does not hurt your credit score.
Prequalifying for an auto loan used car can help you avoid high pressure sales tactics at the dealership. You will know ahead of time what you will have to pay for your vehicle if financing and what type of payment you can expect. After checking with a few dealerships, you may find one willing to work with your credit score and prequalify for used car in order to make the sale. You can shop around at this point knowing that the financing aspect is already taken care of.
Negotiate A Lower Price
You may be able to negotiate a lower price on your vehicle when you prequalify for a loan at the dealership. Dealerships want to make the sale, so they will give you a list price that is affordable when they prequalify you. You will know what your payment will be so it is easier to have that conversation with the salesperson and say “No” when their initial offer is too high.
Save On Fees
Dealerships make a lot of money by charging you all types of fees when buying a car, not just the interest on your loan. If you take out an auto loan on your own, you can avoid these additional expenses. Dealerships make more money off of these extras then they do off of their financing rates and that is why they push them so hard into up selling them to consumers. Dealers may also have special deals with lenders that you don’t get from working directly with those lenders.