Financing a used car is comparatively more difficult than a new one as the interest is high and also the financer looks at various parameters before approving the loan.
Getting the loan approved before finalising the car has multiple benefits.
Here are some of them, according to CarDekho:
Having the loan approved in advance will save the borrowers' processing time when they go to buy the vehicle. Additionally, they get to know the overall loan eligibility based on the budget. This helps them in shortlisting more cars that meet their eligibility before finalizing one.
Shopping like a cash buyer
When borrowers have a pre-approved loan, they can shop for a vehicle based on the purchase price, which is the most important factor. This may also help the borrower with the added benefit from the seller who can offer to close the deal much faster, saving time and effort.
Understanding the costs
The expenses are transparent when they are in charge of financing. There’s no fuzzy math where borrowers have to evaluate optional features based on a monthly payment for the next five or seven years. They either pay more for the car or they don't.
Buying whenever ready
After going through the pre-approval process, borrowers can buy it whenever they are ready. If they go for loan approval later, there can be some last-minute hold-ups that can delay the purchase. But if they have already done the processes, they can shop and buy on the same day, if they want.
Borrowers never know what kind of dealers they are going to deal with while buying car, so having a pre-approval letter improves their chances of negotiating on what matters the most i.e the car’s price.
Dealers sometimes try to divert their attention on the monthly payment by which they aim to adjust other parts of the deal. However, when borrowers go in with a pre-approved auto loan, the monthly payment is not a concern for the dealer.
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