Know Before You Go: Getting Preapproved for an Auto Loan
If you've purchased a car before, you know that walking into the car dealership can be a bit overwhelming, especially if you're not prepared. Buying a new car can be stressful, but it doesn't need to be. By taking a few steps to prepare before you head to the dealership, you can help ease your car-buying anxiety. One of those steps is getting preapproved for an auto loan before you head to the dealership.
Here are a few things to know about getting preapproved for an auto loan.
What is a preapproval?
An auto loan preapproval is a conditional approval (based on your credit, income, and other factors) from the lender that you secure prior to the finalized finance negotiation at the dealership. It's a conditional approval because the final approval will depend on the vehicle (collateral) you decide to purchase. Some borrowers may have a specific vehicle in mind when they apply for preapproval, and some borrowers may only know how much they'd like to apply for but are still determining the type of vehicle. Most preapprovals are only good for a limited amount of time. At AllSouth, a preapproval is valid for 30 days. The estimated terms for the preapproval include the amount of money you qualify to borrow, the interest rate, and the term length.
What are the benefits of being preapproved?
Budgeting: Getting preapproved can help you accurately budget for your new purchase and determine your spending limit. The lender will share the loan terms that you qualify for. To help you get a better idea of how much the loan will cost you monthly, you can estimate your payment with our Auto Loan Calculator.
Negotiating power: Walking in with a preapproval gives you the upper hand and shows the dealership that you've done your homework. Since you've been approved for a certain dollar amount that works for your budget, you know how much you can afford and will feel more confident standing firm on the amount you've been approved for.
Spend less time at the dealership: Nobody wants to spend extra time at the car dealership - after all, you're ready to start enjoying your new ride. By getting preapproved, you can save additional time at the dealership since you already have your financing out of the way.
How do I get preapproved?
The preapproval process is straightforward. Here’s what you should have ready when you apply:
- Personal information such as your name, date of birth, and Social Security number.
- Housing information, including your address, how long you've lived there, whether you rent or own, and your monthly payment.
- Income and employment information, such as your gross annual income (your income before taxes come out), employment status, and employer's name.
- Details of your loan, such as how much and how long you want to finance your vehicle.
- If you're planning to trade in a vehicle, you will also need the trade-in information of your vehicle, including the VIN, make, model, and mileage.
How do I finance a car with AllSouth?
AllSouth makes it easy for you to get behind the wheel of your new car. To get started, all you have to do is apply online through our secure loan application, or if you prefer, you can visit any of our locations. After you've applied, we'll let you know if you're preapproved. As mentioned before, your preapproval is good for 30 days, so you have plenty of time to start shopping for your new car. Once you've found your car, have the dealership send us the purchase order, and we'll provide you with a check to pay the dealership (or we can mail the check as long as it's an approved dealership).
AllSouth also partners with dealerships throughout the Midlands through their AutoDirect program. Our AutoDirect program provides a convenient way for members to finance their vehicle through AllSouth while completing all their paperwork at the dealership.
Before heading to the dealership, there are a few additional factors to keep in mind.
- Research the make and model that you’re interested in.
- Discuss the cost of insurance with your provider.
- Consider which vehicle type you’d like: gas-only, electric, or hybrid.
- Know the value of your trade.
The greater your knowledge and preparation, the smoother and more enjoyable the car-buying process becomes. If you have any further questions or need guidance to get started, our team members are happy to assist you every step of the way. Check out this blog with answers from Tracy, our centralized lending manager, to common car buying questions.