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Buy a Car With Pre Approved Loan – How to Buy

How To Buy a Car With Pre Approved Loan – Cars are no longer a luxury, but an absolute necessity. Irrespective of whether you want it to travel to work, to ferry your family around, or as an alternative to poor public transport systems, a car is a non-negotiable in today’s world. Two of the biggest material aspirations, studies have shown, for most people is firstly owning a house, and secondly owning a car. However, not everyone is fortunate enough to be blessed with a bank balance that is so large that they can foot the expenses of the car and buy it outright. However, that does not mean you cannot buy a car! There are plenty of options for people who do not have the means to purchase a car outright with their funds. These include aspects such as taking a loan, reducing the amount of down payment that is required, discounts, and rebates.

If you do your research and evaluate your options properly, you can easily find a number of loan providers that are willing to give loans, as well as pre-approved loans to those who want to purchase a car. Read this guide to understand how a pre-approved loan works and how you should apply for one!

What is a pre-approved auto loan and how does it work? 

If you are someone who has a regular monthly income but does not have a substantial amount of savings, then one of the most ideal options you can take to finance your car is to finance it through a pre-approved auto loan. This works for both buying a used car or a new car! One of the best aspects of a pre-approved loan is that it is much more convenient than a traditional loan.

You can apply for a pre-approved loan from a number of avenues. Banks, traditional lenders, online lenders, credit unions are just some of the avenues that offer pre-approved loans. To understand what the finer aspects of the loan are, and under what terms these institutions offer loans, it makes sense to communicate directly with these institutions and enquire about the loan with them directly. This way, you can also ascertain what the eligibility criteria for these loans are, what documentation you might need to submit, and what the repayment schedules, interest, and down payment required will be.

It is important to keep in mind that although a pre-approved loan is different in some ways from a traditional loan, to ensure liability and risk management, financial companies or the lending institution will continue to examine various aspects of your application, including the accuracy of it, as well as the documentation you submit – some institutions might perform a credit check and an income check, as well as examine the previous debts that you have accumulated under your name. Depending on the evaluation of such information, an interest rate is likely to be charged accordingly. You must remember that you are likely to get better terms for your pre-approved loan if you have a low debt to earnings ratio or a higher credit score.

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One of the best aspects of a pre-approved loan is the short approval time it takes, likely to begin at just about 24 hours or a day for approval, post the submission of relevant documentation. If you are looking to secure a pre-approved loan from a car dealership, ensure that you visit the dealership and communicate with an agent or a representative, and choose a car that matches both the features that you require, but also one that you can pay the loan amounts for. Ensure that you find yourself a good trade-off between the features and the aesthetics you want, and the budget that you are willing to foot.

It is important to negotiate the terms of your deal in your favour as much as possible and enquire about discounts and rebates that you may qualify for. You can either do this online, in case of an online lender, or by communicating with the lending agent in case of a dealership by visiting the nearest one in your vicinity.

Once your loan has been pre-approved, all you have to do is submit a copy of the pre-approved loan which you will be given once the loan has been approved. Once you do so, you can easily get the car of your choice, with the features that you want!

What are the best pre-approved loan plans? 

Now that you have understood what a pre-approved loan you move on to understanding what the best pre-approved loan plans are, and what you need to apply for them – in terms of documentation and other details. Here are the things you need to keep in mind while applying for a pre-approved loan.

  • Proof of income

The thing that most lenders are concerned with is your ability to repay the loan. If you do not have a regular income, the risk or the liability upon the lender is much higher. Therefore, you are required to submit proof of your income, whether in form of your paycheck, rent certificates if you are a landlord, or proof for any other regularly accruing income. Ensure that the proof of income that you are submitting is accurate and reliable to ensure that you get approved.

  • Check out your credit status

As we have stated earlier there is a relationship or a link between your credit status and the terms of the loan that you are given. For instance, if you have a higher credit report or a higher credit rating, you are likely to have to pay lower rates of interest as well as have lower monthly payments. Ensure that you check your credit report prior to applying for a pre-approved loan.

  • Check out the policies of different lenders

One of the best ways to ensure that you can save money and get the best deal out there is to actually check out multiple deals in the first place! Ensure that you apply to different places, discuss the rates and policies that they are presenting to you, and select an option that is the most ideal.

I am not getting my pre-approved loan. What do I do?

There are multiple reasons as to why you may not be getting a pre-approved loan. However, even if you are rejected once, it does not mean that it is the end of the road! You can do a variety of things to improve your chance of being approved. Here are some of the ways that you can increase the chances of approval.

  • Building your credit score

The importance of a credit score has already been stated above, and it is mostly understood that a good credit means better chances of approval, and a bad credit not just lowers the chance of approval but also imposes more unfavourable terms even if the loan is, in fact, approved. Therefore, it is important for you to be aware of your credit score, and to improve it. If there are any small debts on your credit score, pay them off immediately. Attempt to use your credit less, or increase the limits of your credit to keep up a good payment and credit ratio. Furthermore, if there are any errors in the credit report that you can contest, do so immediately. Once these errors are rectified, it is quite likely that your credit score is likely to improve!

  • Save More Rather Spending More Make a report

You can make and submit a report to the lender pertaining to your capacity to repay the loans that are given to you. You can also attempt to save more money, budget better, and ensure that you (and your family, should you have one) cut down on all non-essential expenses until your loan plan is approved. This demonstrates fiscal responsibility to the lender, and by presenting a report thereof, you are more likely to be approved for a loan.

  • Get a guarantor or a co-signer

  • Like stated above, the aspect that most lenders consider as a primary criterion prior to lending is determining whether or not you can repay your loan. By getting someone as a co-signor (basically, an individual who can take on the liability of your loan should you be unable to repay it), the chances of you getting approved for your loan is much easier. If your co-signor or guarantor also has a better credit score than you, you can leverage that as well, to get better deals on your loan. Also Read  Guaranteed Car Loans With No Credit No Money Down No Cosigner

What can make the process for my pre-approved loan easy?

Now that you have seen what you could do to fix the situation in case you are not able to get a loan, there are certain things and certain steps to make the loan process easier on yourself. Here are some of the ways that you can prepare yourself and your finances to get through the loan process with your mind intact!

  • Make a Budget, budget, and budget!

Anyone who has ever taken a course on fiscal responsibility or finances will know how important it is to budget. A budget is basically a plan that takes your earnings and allocates it towards different expenses. If you make a wholesome and a structured budget and stick to it, not only can it help you meet your monetary needs, but you will also find that you are able to save! Obviously, if your budget wholesomely, it can go a long way towards you being able to repay your loans and get that dream car you have always wanted.

  • Keep track of your finances

While many people are tempted to go in for an extremely elaborate and swanky sports car in the first instance, the truth is that you have to check your financial status and pick a car that fits within the budget that you have made. Do not overestimate your ability to repay your financial obligations as it is always better to err on the side of caution!

  • Go to a lender who will be able to meet your needs

There are many different types of lenders in the market today – some that focus on giving good deals, lower rates of interest, do not require credit checks or a down payment, or that offer pre-approved loans. Ensure that you check out the testimonials of previous customers and choose a lender whom you believe can fit the brief of what you need the best.

Why do I need a car loan that is pre-approved? 

The obvious benefit of getting a car loan that is pre-approved is that it is already approved! For those who are struggling financially and want a loan, the pre-approval process is truly a boon. Here are some of the main reasons as to why it makes sense to get a pre-approved car loan.

  • You can budget effectively

One of the biggest problems of loans that are not pre-approved is that it is not possible to determine how much you will have to have to shell out from your budget to meet the obligations of the loan. However, the interest rates, the monthly payments, and the other financial liabilities that you will have to bear in the case of a pre-approved loan are clearly laid down. This is a huge advantage for people who want to save a bit of money.

  • The interest that you have to pay is low

One of the best things about a pre-approved loan is that the interest payments that you will have to make are much lower compared to any other form of a loan. Similarly, as previously discussed above, the terms of the loan are made clear to you prior to actually having to pay it – this means that the interest amount is fixed and easy to ascertain.

  • Negotiation is possible

If you want to get a pre-approved loan, you can negotiate the terms of the loan in your favour. For instance, you can select the type of car you want, the features that you want your car to have, and depending on the amount of down payment and interest that you are willing to put down, you can also negotiate the terms of the loan as well. Furthermore, given that the terms are clearly delineated in the case of a pre-approved loan, you can examine which features and terms suit you the best.

  • There is no complication of spot deliveries

Now a problem when it comes to purchasing a car is that you may end up buying it at a time when the lender is either inaccessible or closed – this means that you will have to find a time when the lender can communicate with the dealership for you to be able to buy your car. If your loan in the meanwhile has not been approved, you will either not be granted the delivery of your car, or you may have to end up returning your car if the delivery has already been facilitated. In the case of a pre-approved loan, as has previously been stated, the lender is likely to give you a certificate of approval which you can deliver to your dealership. This will ensure that you can take the possession of the car on the date that you want to or have planned to, originally.

  • Saves time and effort

Undoubtedly, perhaps the biggest advantage with pre-approved loans is that it makes the entire process so much faster and easier. You are going to have the finance at your ready disposal. There is also a limited requirement for paperwork in the case of pre-approved loans, making it a no-brainer that it is an ideal choice.

Best Auto Pre-Approval Loan Lenders

Now that you have understood how to get a pre-approved auto loan, what it entails, and why it is better than other options for a variety of reasons (depending on your needs and circumstances), the next obvious question to address is where you can get these loans. Here are some of the leading companies in the market that offer pre-approved auto loans.


If you are looking for an institution that has been around for ages and that has a track record of reliability and trustworthiness, USAA (site) is one of the ideal solutions. Apart from providing pre-approved auto loans, USAA also provides various other loans such as home loans, auto insurance loans, banking support, etc. Usually, the period for approval takes about 45 days, and this is one of the lowest approval times in the market today. You have to be a permanent resident of the US as well as a citizen to qualify for a pre-approved auto loan from the USAA. Depending on where you are located, and other factors, including the type of car that you want and the features, the terms of the loan may vary.

Car Finance

If you live in the US, you have already probably heard about car finance (site). The approval period takes just about a month in most cases. The APR that Car Finance offers is at about 4.99%, making it an ideal choice. While they have a minimum credit score of 500 to be eligible for a loan, you can always improve your credit ratings to apply for a loan under car finance. If you are under the age of 18, you should probably look elsewhere as the other eligibility criterion that car finance has is that you have to be a major.

Capital One

Another ideal option, Capital Loan (site) also offers pre-approved auto loans with an average wait period of about 30 days for approval. The APR is about 3.24%. Apart from usual eligibility criteria like being a major, you are also required to submit proof of permanent residence (usually in the form of a mortgage payment or utility bills) to qualify for a pre-approved loan.

New Federal Credit Union

Credit Unions are a great choice when it comes to taking loans and New Federal Credit Union (site) is no different. The processing time for a pre-approved loan from the NFCU is slightly longer than the other companies mentioned above, with an average approval period of about 60 days. To be eligible to apply for a pre-approved auto loan from this company, you will have to be a citizen of the US, a major, and also submit the required documentation that the company seeks.


If you have read the article, you will understand that you need not feel hopeless solely because you do not have the funds to purchase a car outright as there are plenty of other alternatives that you can exercise, such as a pre-approved auto loan. Pre-approved loans are ideal as they make the process easier, and also enumerate all the terms and details of the loan in a systematic and clear fashion. You can either search online for the companies that offer a pre-approved auto loan or look for feasible options in your neighbourhood as well.

Ensure that you have all the documents required prior to applying for the loan to hasten the approval process. So long as you meet the eligibility criterion, fill the application forms correctly, and provide the necessary documentation, you will find that getting a pre-approved loan is not at all a cumbersome process!

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