Discover the benefits of pre-qualifying for a car loan
Prequalification provides an estimate of how much you might apply for based on your self-reported income and credit report. Understanding your borrowing capacity is beneficial for selecting a car, and negotiating with dealers and helps you secure the best interest rates available. But, prequalification is not an actual financing application or a guaranteed offer.
In this article, experts from Clement Pre-Owned, a used car dealership, will guide you on pre-qualifying for a car loan process. We'll discuss the difference between prequalification and preapproval, the benefits of getting pre-qualified, and how to apply.
Preapproval vs. prequalification
A pre-qualification is a rough estimate provided by the lender regarding how much you may be able to borrow and at what rate. It's typically less detailed than a more accurate preapproval request.
Bank of America's explanation of the process is:
"Prequalification is a preliminary review with no impact to your credit score. Prequalification is not an application, and it is not a commitment to lend or a loan approval."
Pre-qualification can be regarded as the initial stage in securing a competitive car loan, while
pre-approval is the next step, a conditional commitment of a financial organisation to grant you the amount.
A pre-approved car loan is an offer conditionally approved by a lender for vehicle financing. Estimated terms there include interest rate, amount, and expected approval length. However, to confirm your wish to gain this loan, you must formally apply for it.
Here's a comparison of the similarities and differences between prequalification and preapproval:
| Prequalification | Preapproval |
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Why should you get pre-qualified for an auto loan?
Getting pre-qualified for a car loan streamlines your car-buying journey. Here are some reasons why you should consider getting pre-qualified:
- Understand your affordability: having a specific price range allows you to refine your choices and concentrate on vehicles that align with your budget. This saves time and prevents overwhelming choices.
Spend as much time as you need to find the best rates: prequalification lets you explore different lenders and compare their interest rates with no impact on your credit score. You can take your time without feeling rushed to make a decision.
What do you need to pre-qualify for a car loan?
For prequalification on an auto loan, you don't need to provide supporting documents. This informal process simply helps you understand where you might stand if approved. However, having the following information ready will help your lender assess the best options for you:
- Desired amount
- Income
- Current debt obligations
- Credit score. Lenders often have minimum score requirements. Learn more about what constitutes a good score for a car loan.
At Clement Pre-Owned, you can pre-qualify instantly without submitting paperwork. You may also customize elements such as the down payment, term length, and other details to create a deal that suits your needs and financial statement
Where can I get pre-qualified for a car loan?
You can obtain pre-qualifying or pre-approval for an auto loan from various financial institutions, including banks, credit unions, and online lenders. But, according to the Auto loans consumer survey, in 2023 the most popular auto lenders were banks. Here's a breakdown of the best places to get pre-approved:
Banks: Most national banks offer car loan pre-qualifying and pre-approval, simplifying the process by allowing customers to handle all financial transactions in one location.
Credit unions: these institutions typically provide interest rates lower than than banks because they treat each customer as a member of the organization. Some credit unions may have specific requirements for joining, such as residency in a particular area or employment with a specific employer.
Online lenders: Online lenders may offer more competitive rates compared to banks or credit unions. The downside of online lenders is their limited customer service. While online lenders can be ideal for basic auto loans, they may not be the best option for specialized needs, such as financing a vehicle intended for business use.
Clement Pre-Owned: At Clement Pre-Owned, you can get pre-qualified within minutes with some of the most competitive rates in Missouri. We achieve this by partnering with multiple banks and other financial institutions. You can fill out the form on our website now and pre-qualify through Capital One Bank, known for its excellent dealership loans, and other financial institutions within several clicks.
Three simple steps to get pre-qualified
- Fill out the form at Clement Pre-Owned's website, usually taking less than 5 minutes: provide name, contact information, employment status, date of birth and address.
Get pre-qualified with Clement Pre-Owned
- Explore our inventory of over 1000 autos within our car lot to choose your favourite.
Shop our inventory of used cars
- Receive financing terms and schedule a visit to Clement Pre-Owned to finalize the paperwork and drive your new vehicle home!
When to get pre-qualified and when to get pre-approved?
- Opt for pre-qualification when you're considering getting or refinancing an auto loan. This gives you a thorough understanding without committing too much time.
- Choose pre-approval just before you plan to purchase, lease, or refinance a car. Keep in mind that most hard credit inquiries processed within a 14-day period, making it advantageous to conduct rate comparisons within this timeframe rather than obtaining pre-approval over weeks.
At Clement Pre-Owned, you have the option to either pre-qualify or pre-approve. In either case, we can smoothly progress to the car loan approval and vehicle purchase if you are satisfied with the offer.
Call us to learn more (314) 794-5734
