Loan Pre-Approval Letters: The Benefits

Having a pre-approval letter is an important advantage to have when financing a new car purchase, but one that many car shoppers don’t obtain. Getting a pre-approval letter is actually a straightforward process, especially from your local bank or credit union, and is tremendously valuable during the car shopping process. Here are some notes that will help.

A pre-approval letter is a statement from a lender that specifies the amount of money they are willing to you. While it is not a guarantee of receiving money, it is a strong recommendation, and provides many benefits for the borrower.

The main benefit of having a pre-approval letter (besides attending Cartrast events for free) is that when discussing financing at the dealership, the dealership has a benchmark to beat if they want you to use their lenders. This will give you an additional advantage and allows you to get favorable financing terms. The dealer can make more money if you use their “in-house” financing, and may prefer for you not to use an outside lender. You can use your pre-approval to your benefit to get a lower overall purchase or lease price.

A pre-approval letter does not affect your credit score...in fact, taking financing and making payments on time can boost your score significantly. Obtaining a letter indicates fiscal due diligence, and can make lenders more likely to back your loan request.

Another benefit is that a pre-approval letter confers to dealerships and banks that you are a serious buyer, not just a so-called “tirekicker.” This ensures you will get the best service possible when buying a car, as well as access to the best financing rates.

So how do you get one of these coveted pre-approval letters? One way is to head to your bank or credit union and ask to talk to the individual in charge of auto loans. Another way is to visit your bank or credit union’s website and fill out an application form online. As your bank or credit union has a good view of your current financial situation, they can quickly determine how much you can borrow and generate a pre-approval letter towards a car loan.

That’s all there is to it! Go out, get that letter, and sign up for Cartrast’s Electric Vehicle Test Drive Experience for FREE. You’re well on your way to getting a new vehicle!