Pre approved auto loans can help you to save time and money when purchasing a new or used vehicle. Buying a new car is stressful enough without having to worry about getting approved for financing after you’ve already picked out your dream car. Having pre approved financing is like having cash in hand and can help you get a better deal from a car dealership.

Getting pre approved for a loan can make the shopping experience more enjoyable but it can also limit your buying options. Like any other financial decision you should do your homework before accepting the terms of your pre approved loan.

Pros of Pre Approved Auto Loans

  • Knowledge - When you walk into the car dealership you will already know exactly how much you have to spend on a new car. You don’t have to wonder how much you’ll be able to be approved for. This lets you find exactly what you can actually afford.
  • Confidence - You will know that you’re already approved for a new loan and won’t have to wonder what kind of terms or rates you will be accepted for. This will also help you negotiate with the car dealership for a much lower price.
  • Saves Your Money - Getting pre approved auto loans cuts the dealers profit. They won’t be able to sell you a loan that they earn a commission on. You can search for pre approved auto loans online at your leisure to find the best financing and options to suite your needs.

Cons of Pre Approved Auto Loans

  • Expiration - When you are pre approved for a loan you will have a limited amount of time to accept the terms. If you are unable to find a car you’d like to purchase in this period of time your offer will expire.
  • Lack of Flexibility - If you find a vehicle that’s slightly more expensive than you are approved for you will have to apply again to try to cover the cost of the vehicle.
  • Collateral - You may be required to provide some kind of collateral. This is especially true if you have bad credit. Collateral may include your home or another vehicle. If you default on the loan the lender may have the right to seize the collateral.