How to Buy a Car with a Pre-Approved Loan

When you go to purchase a car, there are so many mistakes that you can make. The salesmen at car dealerships are notorious for being sneaky and underhanded, especially when it comes to car loans. If you don’t go to a car dealership with a pre-approved loan, then the salesmen will likely connect you with one of their partnered lenders. These are lenders who charge higher interest rates and give commissions to the dealership for their customer referrals.

What this all means is that you get the worst of the deal. To avoid this from happening, you must get pre-approved for a loan by a lender that you choose before even going to the dealership. There is no law that states that you must use the dealership’s lender. As long as they get their money for the car, then it doesn’t matter which lender gives it to them.

Tips and Steps

When you get pre-approved for a car loan, you know how much you can afford. You’ll go to the car dealership knowing what your maximum price is going to be for a car. Then you won’t waste your time looking at cars which are too much money for you. In addition, a pre-approval lets you learn more about the interest rates and monthly payment prices too.

Below are the steps to buying a car with a pre-approved loan:

1) Find Lenders and Get Pre-Qualified

The first thing you’ll want to do is find auto lenders and get pre-qualified for an auto loan. You can go on the internet and find them easily. Websites like and will help pre-qualify you with several different lenders at once. Pre-qualification is different than pre-approval because only a soft inquiry is being made into your credit profile. This has less of an impact on your credit score than a hard inquiry.

You are expected to fill out a lot of personal information, such as your name, address, social security number, income amount, and so on. After you submit the information, you’ll receive pre-qualification results within 30 seconds. Then you’ll be presented with a list of lender choices and the loan terms attached to them.

2) Get Pre-Approved

Choose a few lenders and get pre-approved for an auto loan from them. Pre-approval creates a hard inquiry into your credit report, which has a negative impact on it. Your credit score will go down for sure. But don’t worry about having multiple hard inquiries because if you get pre-approved by multiple lenders within a 14-day period, then all your hard inquiries will count as one.

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3) Choose the Best Offer and Go Shopping

When you’ve been pre-approved for multiple types of auto loans, choose the one with the very best terms. This is one that will have the lowest interest rate and monthly premium. The lenders should provide you with a pre-approval letter that you can give to the car dealership after you’re ready to purchase a vehicle. So, go to your local dealership and start searching for a vehicle that is priced within the amount you’ve been preapproved for.

However, don’t just search for cars that are priced at the maximum amount you’ve been preapproved for. You’ll want to leave yourself a little room in the price because you need to account for all the extra fees that get added to the total price. Once you find a car that you’re interested in purchasing, then you can simply give your preapproval letter to the salesperson, and they’ll get started with the purchase process.


Getting a pre-approved loan is not a complicated process, and it can save you a lot of money in interest payments. You just need to take these extra steps before stepping foot on a dealership.

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