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.
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.
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.
You can get preapproved for boat, RV, motorcycle, and other vehicle loans as well, and experience the same benefits.
Having a preapproved auto loan may reduce stress, and lets you know exactly how much you can spend on the vehicle.
When you are preapproved for your auto loan, you may spend less time at the dealer.
Information is power. Preapproval sets you up for better negotiating because you know the amount of money you are approved to spend.
Preapproval gives you flexibility to choose the vehicle and the dealer you want to work with.
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.
It’s a straightforward process, but here are a few things you may want to do first.
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.
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.
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.
While lender requirements vary, Alaska USA requires that you be:
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.
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:
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.
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.
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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