What is a car loan pre-approval?
Car loan pre-approval is when your lender agrees in principle to lend you a certain amount of money to buy a car, subject to credit approval and a lender accepted invoice from the dealer or the private sale vendor. This implies that, based on the information you provide at this point in the process, they can offer you a limit to how much you can borrow.
Does pre-approval guarantee a car loan?
Pre-approval is a conditional approval based upon the information received at the time of issuance. It is not a guarantee but is an important part in the process. Once all documentation has been received and the asset financed meets the lenders approval a final credit assessment is conducted. Once the lenders conditions have been met the loan moves to an unconditional approval.
How long to get approved for a car loan?
You can get pre-approved for a car loan on the same day and get final approval within two days. The overall car loan processing time, from application to settlement, takes 3-4 days.
How much can I be pre-approved for a car loan?
Our minimum loan amount for a private vehicle is $5,000 and our maximum loan is $100,000. For a business vehicle, the minimum is $10,000 and the maximum is $150,000. The amount you can be pre-approved for will depend upon the vehicle purchase price and your financial circumstances.
Why get pre-approved before going to a dealership?
The main reason to get pre-approved before going to a car dealership is to strengthen your position when negotiating with the dealer. It is difficult to play hardball when you are depending on the dealer for finance! If you know your budget, you can bargain with more confidence.
Budget is determined
Because you know how much you can borrow, you’ll be able to filter down which make, and models are affordable. This allows you to concentrate your efforts on studying vehicles in your price range while remaining realistic about what you can and cannot buy.
It’s an easy out when dealer finance is brought up
When dealer finance is brought up during a conversation with a salesman in the showroom, some people may feel a little uneasy. And they’ll do everything they can to convince you, not only because it helps them fudge numbers during negotiations
When dealer finance is mentioned, you can simply say you’ve been pre-approved and aren’t interested if you have pre-approval.
You have a bargaining chip during negotiations
Also, you’re essentially a cash buyer, that is the lender has agreed to give you the money in advance, indicating that you’re serious about buying and won’t waste time, you’re there to purchase (if they can provide you the best deal!).
Furthermore, once you’ve decided on a make and model, the salesperson will be unable to utilise any of their numerous smoke-and-mirror techniques to divert your attention away from the car’s final sale price. Approach them and ask for their best bottom-line driveaway price; if they mumble about it, walk away, and move on to the next dealership.
Steps in getting your application sorted.
How to obtain car loan pre-approval
It’s important that you get some things ready ahead of time to put your best foot forward when it comes to obtaining pre-approved for your vehicle loan.
Collating the documentation that may be required
It would include a few recent payslips as proof of income, information about credit cards and other loans (if applicable), identity documents like licence, Medicare card and passport and anything else you believe the lender might need to see.
Finding out your credit score
It’s a good idea to check your credit score before applying for a vehicle loan pre-approval because it can affect not only whether you get pre-approval but also how favourable your interest rate is. Before you apply, you might want to concentrate on improving your score.
Note that each time you apply for pre-approval a credit check is conducted, so if you get pre-approvals from multiple lenders, it can affect your credit score. To avoid this, shop around first and only get pre-approval from your preferred lender.
Get a good idea of the type of car you want
While the make and model of the car you want may be determined by how much you can borrow, you should still know what kind of car you want. Is it a sedan that you’re looking for? Is it a SUV? Perhaps a four-wheel-drive vehicle? A little pre-planning will help you get a better idea of how much money you’ll need to borrow.
Our online enquiry form will give you an idea of pre-qualifying questions
Speak with us to get pre-approved for a car loan today
Thinking about getting conditional pre-approval for your car loan sounds like something you’re interested in? We’re here to help. Send us a message and one of our consultants will call you.
