August 9, 2021

What is Auto Pre-Approval and Why Do It?

If you’re considering a new (or used) set of wheels, applying for pre-approval of your auto loan at your credit union or bank first could save you time, headaches, and money.

What is Auto Pre-Approval?

Getting pre-approved for an auto loan means applying for an auto loan with your friendly neighborhood credit union or bank. If approved, your financial institution will tell you how much funding you can obtain and the interest rate they can offer you based on your application. You will also receive an approval letter that lists these numbers.

Having pre-approval in hand brings a range of benefits to the savvy car shopper. Plus, it can save you more than just money in the long haul.

Pre-Approval Helps You Budget

When you visit a car dealership to purchase a car, the dealer may ask you how much you’re willing to spend on a vehicle. You may have already worked out a number, or you have a vague idea of how much you can realistically afford. Either way, if you don’t have a budget nailed down, it’s easier to be talked into spending more than you intended.

On the other hand, pre-approval will tell you exactly how much you can afford to spend on a car, truck, or van. Simplifying your search could help you narrow down your options and choose the best deal. There’s no rush and no pressure when working with your credit union or bank to figure out your budget in advance.

Auto Pre-Approval Helps You Negotiate

Having a pre-approval letter in hand can completely change the conversation with sales representatives when you step on the car lot to shop for vehicles. You can feel confident when negotiating because you have a set budget and a rate locked in. The dealer can’t tempt you to overspend because they are limited to showing you options that fit your stated budget.

Pre-Approval Helps You Close the Deal

A pre-approval letter gives you many of the benefits of being a cash buyer. Much like cash in hand, your pre-approval letter shows the dealership you’re serious about buying soon. It’s a vital clue that spending time addressing your needs will be worth their time. You won’t have to worry about balancing monthly payments vs. term lengths in the financing office either—it’s all taken care of by your pre-approval.

What Do I Need for Pre-Approval?

If you’re ready to apply for pre-approval, you need a few pieces of information on hand. The list is similar for any financial institution, but here’s what you’ll need for pre-approval with Tulsa FCU:

  • Picture of Driver’s License (front & back)
  • Name, Date of Birth, Social Security Number
  • Mailing Address
  • Employer’s Name and Phone Number
  • Employment Start Date
  • Monthly Income

When dealing with a trusted credit union or bank, they know who you are and what your financial potential could be. There won’t be any pressure to overspend or stretch your budget beyond your comfort zone. In a relaxed setting, you can think about what you need and what you can afford to make the best decision for you.

Consider getting pre-approved if you’re in the market for an auto loan. Many people who shop for auto loans ahead of time can find a lower rate than they would have at the dealership, and the benefits of planning are hard to argue.

This article is for educational purposes only. Tulsa FCU makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.