Top 5 Reasons to Get Preapproved for an Auto Loan

Put yourself in the driver’s seat when you buy your next vehicle.

Thinking about buying a new vehicle but dreading the hassle of the buying process? There are a few things you can do to make things easier before you head to the dealership.

Regardless of the vehicle you want, getting preapproved lets you focus negotiations and potentially get the best deal possible.

What is a preapproved auto loan?

With a preapproval, a lender gives you the okay to borrow up to a certain amount to buy a vehicle. The preapproval gives you the flexibility to shop for vehicles that meet the program guidelines of your lender and fit your budget. By getting preapproved for an auto loan you know exactly how much you can spend, before you walk into the dealership or make a private transaction.

 

How does getting preapproved for an auto loan work?

A preapproved loan is not a loan itself, but it’s a way of knowing that the lender intends to give you a loan to buy a vehicle. When you apply for a preapproval on an auto loan, you let the lender know how much you want to borrow and how long you want to have to repay it. The length of the loan is called the term. You also authorize the lender to pull your credit and the lender may ask to verify your income. Then they will let you know if you are preapproved for the loan, and what your interest rate and monthly payment will be over the life of the loan.

Once you are preapproved, you are free to shop for your vehicle. Please note that not all collateral will qualify for a preapproved loan. Also note that preapprovals are valid for a limited time. If you wait too long, you may have to reapply.

Did You Know?

You can get preapproved for boat, RV, motorcycle, and other vehicle loans as well, and experience the same benefits.

Top 5 Reasons to Get Preapproved for a Car Loan

Here are 5 reasons you should consider getting preapproved for an auto loan

 

1
Know Before You Go

Having a preapproved auto loan may reduce stress, and lets you know exactly how much you can spend on the vehicle.


2
Save Time

When you are preapproved for your auto loan, you may spend less time at the dealer.


3
Be a More Informed Negotiator

Information is power. Preapproval sets you up for better negotiating because you know the amount of money you are approved to spend.


4
Stay Flexible

Preapproval gives you flexibility to choose the vehicle and the dealer you want to work with.


5
Protect Your Credit

Getting preapproved through one lender (with one credit inquiry) is better for your credit than having multiple dealers check your credit as you shop around.


How can you get preapproved for an auto loan?

It’s a straightforward process, but here are a few things you may want to do first.

Calculate how much you want to borrow

Some experts recommend spending no more than 15% of your take-home pay on a vehicle. That percentage includes other costs such as insurance, gas, and maintenance.

Consider your loan term

While a longer-term loan results in lower monthly payments, you likely want to manage the amount you pay in interest over time. Plus, you’ll probably want to avoid owing more money than your vehicle is worth. Consider the total interest you’ll pay over the life of the loan, then consider whether the vehicle you are looking at is worth the expense to you.

Make sure you’re ready to borrow

Because your interest rate and your ability to get preapproved for an auto loan depends on the lender’s perception of how well you can pay off the loan, start by making sure your credit score is accurate. Having a good score makes it more likely that you’ll get approved, so if you find errors, take time to fix them.

Make sure you qualify for an auto loan

While lender requirements vary, Alaska USA requires that you be:

  • At least 18 years old
  • A U.S. citizen or resident alien
  • A member, or be eligible to become a member of Alaska USA Federal Credit Union

 

Insurance products solicited, offered, or sold: are not a deposit or other obligation of, or guaranteed by, Alaska USA Insurance Brokers, Alaska USA Federal Credit Union, subsidiaries of Alaska USA Federal Credit Union, or by the person soliciting the insurance; are not insured by the National Credit Union Administration (NCUA), or any other agency of the United States; and are not insured by Alaska USA Insurance Brokers, Alaska USA Federal Credit Union, subsidiaries of Alaska USA Federal Credit Union, or by the person soliciting the insurance. Alaska USA Federal Credit Union may not condition the lending of money, extension of credit, or renewal of a loan on whether you purchase an insurance product from Alaska USA Insurance Brokers, Alaska USA Federal Credit Union, its subsidiaries, or any particular entity. Alaska USA Federal Credit Union may require that you purchase a certain amount of coverage, and may require a certain level of financial soundness and service by the insurance company.

How to Apply for a Preapproved Auto Loan

You can apply with Alaska USA online, over the phone or in person. When you apply for a new or used auto loan with us, you’ll need the following:

  • Social security number
  • Physical and mailing address
  • Employment information
  • Gross monthly income
  • Date of birth

Choose a requested loan amount and term and be sure to note that you want to get pre-approved. 

Once you get preapproval, it’s time to shop for your vehicle! Be sure to bring your ID, proof of residence and a copy of your preapproval.

Did You Know?

What about those 0% financing deals? Only people with very good credit qualify for the zero- or low-interest financing. If that’s you, and if you have the choice between 0% financing and a cash rebate, don’t automatically assume that 0% is the best deal. Take a few moments to compare the two. Depending on the rebate amount, the ‘free’ financing may still cost you more over the life of the loan.

Top 5 Reasons to Get Preapproved for a Car Loan

Auto Loan Preapproval FAQs

Loan Preapproval Helps You Drive a Good Bargain

When you walk in, ‘cash in hand’ with a preapproved auto loan, you can focus just on the total cost of the vehicle, which lets you drive away knowing you negotiated a solid deal. Apply for a preapproved auto loan with Alaska USA today!

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