Many people choose to obtain pre-approval for a used car with a trade-in. If your current vehicle has equity, you can use its value towards your next purchase and reduce the price and the amount you borrow. But applying for a loan isn’t the first step to financing a vehicle. Obtaining pre-approval for a used car loan from Hawthorne Auto Square is easy. We’ll look at why pre-approval is so important and answer common questions people have.
Reasons to Get Pre-Approval for a Used Car Loan
Getting pre-approval for a used car with a trade-in can make your purchase more affordable. The pre-approval process is simple. But not everyone considers it before shopping for a used car. The advantages of obtaining pre-approval for a loan include:
- A Commitment from the Lender: Pre-qualification for a loan isn’t as much of a commitment as pre-approval. Once you’re pre-approved for a loan, the lender isn’t likely to change the loan rate, so you know almost exactly what you qualify for.
- Helps Set a Budget: Pre-approval for a loan shows exactly how much you can borrow at what interest rate. You don’t have to use the full pre-approved loan amount. However, you can start shopping for cars knowing what you can afford and the payments you can commit to.
- Narrow Down Your Choices: You can search for cars within your price range instead of looking at vehicles you can’t afford. However, don’t only go by the listing price. Add about 10% to factor in taxes and fees, although a trade-in can help offset some of the purchase price.
- Avoid Markups at the Dealership: Dealerships often advertise competitive used car prices, but mark up interest rates to profit. Getting pre-approved for a loan means you can compare the rate already offered to what the dealer quotes while you’re shopping around. And, if the dealer pitches add-ons you don’t want, you can decline them if the total exceeds your pre-approved loan amount.
- Saves Time at the Dealership: Getting pre-approved can reduce the time you spend in the dealer’s financing office. You already know how much you can borrow. This can mean getting into the car you want and enjoying the ride instead of waiting around all day.
- You Know What to Expect: Once you’re pre-approved for a loan, you can walk into the dealership with a strategy. Or, during the planning stage, you can work to improve your credit and apply again later. Regardless, you can have a budget to work with once you meet a sales representative.
Can Getting Pre-Approval Hurt My Credit Score?
Lenders use a hard credit inquiry during the pre-approval process to determine the amount and interest rate, causing your credit score to drop slightly. The impact is typically minor, but consider waiting to obtain pre-approval until you’re seriously considering a used car purchase.
How Much Does Pre-Approval Drop My Credit Score?
A hard credit pull can drop your score a few points. The effect is usually temporary. However, check your credit score before applying to ensure your score isn’t too low; you can also determine if it’s best to improve your credit first.
What Credit Score Do I Need to Get Pre-Approval for a Used Car Loan?
For most lenders, a FICO score of 620 or higher is needed to be considered for a loan. At Hawthorne Auto Square, your credit score isn’t a factor in getting approved. We offer options for borrowers with poor credit, no credit, or a history of bankruptcies or repossessions.
Can I Be Denied a Loan After Getting Pre-Approved?
Your loan application can be denied. Pre-approval does not guarantee you’ll be approved for financing. It shows you meet some of the lender’s requirements. However, a low credit score or having too much debt can affect a traditional lender’s decision. At Hawthorne Auto Square, our financing department is much more flexible.
Where Do I Get Pre-Approved for a Loan?
You can get an auto-loan pre-approval at a bank, credit union, or from an online lender. We offer a simple way to get an instant pre-approval for a car loan on our website. Obtaining pre-approval through our dealership takes just minutes and does not require filling out lengthy paperwork. And, once you’re pre-approved for a loan, you can start shopping around for cars you can afford right away.
Get Pre-Approved for a Used Car Loan at Hawthorne Auto Square
At Hawthorne Auto Square, you can get pre-approval for a used car with a trade-in, and find the car that meets your wants and needs, under one roof. Our in-house financing department and paperless application streamline the process. Regardless of your credit, you can qualify for a low down payment, low-interest loan. Our team will help you find affordable financing options and low monthly payments on a range of makes and models, including popular brands and luxury vehicles.
To get started, get pre-approved for a used car loan online and view our inventory online, or visit our Los Angeles used car dealership today.