How to Get Prequalified for Car Loan?

How to Get Prequalified for Car Loan?

Car financing becomes easier when you prequalify for a car loan. We all know the complexities involved in getting a used car loan in the USA ; however, if you apply to prequalify for a used car loan then you won’t face all lengthy loan processes and you may get better deals from the dealerships as well.

Let’s check all about prequalification and pro tips that are not mentioned in a simple guide for auto loan . When you master the tips on getting prequalified for a car loan then you may have ultimate power of negotiating while buying or trading a car with loan as well.

What Is Prequalification for a Car Loan?

Prequalification is an advanced estimation of how much loan you can get from the lender on what conditions. The name suggests it all - your current financial documents may decide whether you may qualify for a car loan or not. If yes, then how much loan should be given to you considering your credit history and other financial credentials.

You may have a clear vision of a specific car loan after getting prequalified and you may have a clear vision on what car you should buy on loan that won’t be a headache for you in near future.

How to See If You Prequalify for a Car Loan?

There are a lot of vendors, cash unions and federal banks that help you to be prequalified for a car loan. They may do some soft checks on your financial history that you may provide and after checking them, they may suggest that you are prequalified for a car loan or not.

You must understand the difference between the pre-qualified and pre-approved - even if you are prequalified by a certain lender then still you have to provide some extra information during hard checks to become pre-approved for a car loan.

Should I Prequalify for a Car Loan?

Yes! It is always better to be prequalified for a car loan because it may save much of the hustle and time during the actual loan approval. If you have already applied to prequalify for a car loan then you have already begun the long lasting relationship with the specific loan officer, so it may also help you in future while applying for actual loan. Furthermore, you may get the most authentic car deals after pre qualification because you may have a clear idea of how much loan you are getting, so you won’t waste time on out-of-budget cars.

How to Get Prequalified for a Car Loan?

There are 3 major steps to prequalify for a car loan whether you are going to prequalify for a used car loan or a new car loan. It does not matter whoever the potential lender is - you should follow these 3 major steps during prequalification for a car loan.

1. Preparing the Documents

First and foremost step to get prequalified for a car loan is preparing the necessary documents to apply for the prequalification for a car loan. You need to submit your basic credentials like your name, SSN, contact and driver’s license for prequalification of car loan.

If you already have chosen the specific used car to buy or trade-in, you may also need to provide the information about that car as well along with your expected financing amount and the loan duration. So, prepare those documents as well.

2. Browsing the Potential Lenders

Once you have prepared all necessary documents, the next step is browsing the potential lenders. There are many banks, credit unions and private lenders in the market to finance a car loan. You need to browse them to find out their loan plans and their interest rates along with their pros and cons. So, you may shortlist the best potential lenders whose loan amount and low APR would be feasible for you.

3. Submitting the Application for Prequalification

Once you have shortlisted some of the best potential lenders, it’s time to submit the prequalification request. Every lender has its certain criteria to make you prequalify for a used car loan. You need to follow the suggested steps and you should follow their preferred formats for document submission.

Prequalify for Car Loan without Hurting Credit

One of the vital benefits of being prequalified for a car loan is that it won’t affect your credit score. Contrary to the preapproval where the hard inquiry is done on your financial history and it does impact your credit score, prequalification won’t hurt your credit score because there are just minor soft inquiries during the pre prequalification process that won’t hurt your credit score. You just have to get an estimation about potential financing, so there won’t be any damage to your credit score during prequalification.

Where to Get Prequalified for an Auto Loan?

There are some banks, credit unions and some major car dealerships that make you prequalified for their financing after doing a soft inquiry on your financial history. You can also approach some reputable car dealerships in your own state for prequalification for used car loans. For example: If you live in Maryland then you may visit Maryland car dealers to get prequalified for used cars in Maryland .