What is a pre-approved car loan?
In the market for a new car and want to drive away in your new set of wheels, asap? Then a pre-approval on a car loan may help speed up the process.
What is a pre-approved car loan? Simply put, it is an initial assessment and approval of your eligibility to take out a personal loan on a car.
Getting a pre-approved car loan is a good idea, especially before you make your final decision on which vehicle to buy. This step will allow you to get a better idea of how much money you can borrow for a car loan, making it easier to plan and budget for the future.
What is a pre-approved car loan?
A pre-approved car loan is when your lender agrees to give you a loan to purchase a new car before you’ve even bought it.
If you have decided to get a car loan to finance a new car but haven’t yet decided on which car to buy, then getting pre-approval from your lender can help you speed up the approval process.
Pre-approval is a jump-start to the car loan approval process. It is a quick evaluation of your financial circumstances and provides you with an assessment of how much you can borrow along with suitable loan options.
Getting pre-approval for a car loan can help you to budget better, providing you with a price range that fits in with your current financial circumstances.
Arriving at the car dealership with a pre-approved finance and a set budget will allow you to negotiate on the car you’re willing to purchase and also stop you from spending more than you can afford.
Benefits of getting pre-approval on your car loan
The greatest benefit of a pre-approved car loan is that it allows you to negotiate a better price on a vehicle.
Having pre-approval on a car loan means that you can enter a car dealership and not be tempted by or talked into more expensive vehicles and dealer finance options.
A pre-approved car loan will provide you with an initial budget range that you can use to improve your bargaining power. It’s also a useful way of speeding up the entire loan approval process. If you meet your chosen lender’s eligibility requirements, then going through the pre-approval stage will save you a lot of time in the car loan application process.
At RateSetter, you can apply for pre-approval on a car loan in just 10 minutes, allowing you to start the car hunt and buy your new set of wheels even faster!
How to apply for a pre-approved car loan
Before applying for pre-approval on your car loan, it is important to note that getting pre-approved does not mean the loan is guaranteed. Certain lenders have their own eligibility requirements, so it’s important to do your research first.
Additionally, different lenders offer different pre-approval periods. RateSetter will approve you a month in advance so that you can start shopping for the car that you want or need sooner. Assuming you’ve compared car loan rates and have a rough idea on which vehicle you’re interested in, then you can begin the pre-approval process.
Applying for a car loan with RateSetter is easy, and every step can be done online.
You will first need to apply for a quote. You can do this by completing the quick 1-minute RateEstimate. This quote tool will generate your personalised interest rate and allow you to calculate your loan amount and loan terms.
From there, you can select your preferred loan option and start your pre-approval application. If you have already found the car you want to purchase, you can enter the vehicle details as part of your approval. If you are still looking for a car, we’ll ask you to provide a rough indication of the vehicle type you’re looking for. This can be updated during the settlement process once you have found your car.
As part of the pre-approval process, you will need to verify your identity. Make sure that you have your proof of identity documents such as your driver’s license, handy. You will also be asked to verify your income, expenses, and liabilities. Make sure that you have your banking details on hand to help you complete this step.
Once you have submitted your pre-approval application, we will look for evidence of how suitable a secured car loan is to your situation. In order to do this, we will review:
- Your employment stability
- Your income
- Your expenses
- Your repayment history
- Your credit history
Once pre-approved, you will be notified and then be able to shop for a new car with confidence!
Once you’ve found the vehicle you want to buy, you’ll be able to log into our online self-service portal to complete the settlement process and add any documents or information needed to complete your loan.
Interested in taking out an award-winning car loan? Check out your personalised rate now!
Sebastian has over 12 years experience in consulting, marketing and finance. He has worked with Australia’s largest banks and emerging fintechs across lending, investing and insurance. Sebastian has a Bachelor of Commerce and Bachelor of Laws with Honours.
This information does not constitute financial advice and you should consider whether it is appropriate to your circumstances before you act in reliance on it. Any opinions, forecasts or recommendations reflect the judgement and assumptions of RateSetter as at the date of publication and may later change without notice.