The power of preapproval: 5 reasons to secure financing before buying a car

T
Sep 13, 2023 8:00 AM PDT
3 minute read
preapproved auto loan

SUMMARY

Understand the power of walking into a dealership prepared for your new car with your financing already secured.

This article is sponsored by Navy Federal Credit Union. Navy Federal Credit Union is federally insured by NCUA.

In the exciting process of purchasing a new car, one crucial step can significantly impact your overall experience: securing a preapproval for financing. Whether you are looking to get a new truck with your reenlistment bonus or just wanting a more reliable family car for when you PCS, you want to be prepared. Imagine walking into a dealership armed with the knowledge of your budget, negotiating power and the confidence to make informed decisions. A preapproval not only streamlines the car-buying process, but also provides you with a range of advantages that could save time, money, and stress.

Let’s take a look at more reasons to secure financing beforehand:

Enhanced negotiating power: Wouldn’t it be great to have the answers to a test before walking in on test day? Preapproval is much like that scenario. This knowledge gives you stronger negotiating power because you can confidently discuss prices and financing terms with car dealers. You can also focus on negotiating the car's actual price instead of getting tripped up in additional financing discussions.

Borrowing clarity: A preapproval helps you determine your borrowing power. By considering factors such as your income, expenses and credit history, lenders assess your financial situation and provide you with a loan amount and interest rate. This knowledge allows you to narrow down your car options to those within your maximum borrowing amount. You can use an online calculator like Navy Federal’s Car Affordability Calculator to help you figure out a car price that works with your budget

Streamlined buying process: With a preapproval, you have already completed a significant part of the financing process before stepping into a dealership. This means you can avoid applying for financing at the dealership and jump straight into finalizing the purchase. It can simplify and help expedite the buying process, reducing paperwork and time spent at the dealership.

Inflated dealership interest rates: A dealer may offer you a higher interest rate than what you might receive directly from a financial institution that you know and trust. After all, the dealer’s rates may be marked up from bank rates, to compensate the dealer for coordinating the financing. It's a good idea to check out Navy Federal to see if you can get a better rate, plus getting preapproved for an auto loan is simple. Navy Federal also understands military life and knows you don’t always have a lot of time to wait. They can usually give you an auto loan decision in seconds.

Increased confidence: In negotiations, confidence is key. Knowing you have been preapproved for a car loan gives you just that. It helps you focus on finding the right car that meets your needs and preferences without worrying about the uncertainty of securing financing.

Before you go car buying, apply online for a Navy Federal Credit Union auto loan or call 1-888-842-6328. With a Navy Federal preapproved auto loan, you’ll be better prepared to drive away in your new car.

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