Introduction
In an ideal world, we could pay for cars and never be faced with monthly payments or debts. And with cash in the pocket, we could negotiate the price of a car more aggressively because the salesperson would know we had the cash and could easily take the business elsewhere. However, we live in the real world where the number of people who can afford to pay cash for a car is countable. The majority of us have no option but to seek car finance.
The disadvantage for those that start their car financing at the car dealership is that they rarely know whether the car loan that they are being offered is the best possible deal. Also, it complicates the negotiation process and limits where you can compare the best price. Getting a preapproval for your car loan is a better way. A preapproval enables you to enjoy the benefits of buying a car in cash without having to save for years. Here are our proven tips to get pre-approved for your auto loan.
Check your credit score. 
Citizens are entitled to a free credit report copy every year to enable them to keep in touch with their credit rating. Your score is critical and it determines your car loan rates, and also the total amount of money that you qualify for. Other factors that may affect how much you get are your level of education, how much you earn, your age, and the duration that you’ve been employed.
Arming yourself with the information about your credit score enables you to be choosy about the lenders when applying for car financing. If you have a good credit score, you should keep off bad credit lenders. First, you do not have bad credit. Secondly, you are likely to get a better deal for your car loan elsewhere.
Set a budget 
The down payment for your car alone will be 5%-10%. Additionally, you will have to consider insurance, cost of fuel, and maintenance. Your transportation cost will be 18%-20% of your monthly income.
For example, if your income is $3,000 a month, the payment you make towards your car loan shouldn’t exceed $300 a month. If you plan to drive a lot and hence use more fuel, you should adjust the amount downward.
Tinker with your budget depending on the car type that you are looking to buy. In case you are buying a new car, you probably won’t have to be concerned too much with maintenance. Similarly, a hybrid car won’t require so much money on fuel. These scenarios would allow you to pay a slightly higher amount for a car payment.
There are online loan calculators and car finance options that enable you to figure out the amount of loan you could potentially get according to your credit history, credit score, and income.
Your Bank is the first port of call
You are likely to have the best luck when you choose a car finance company or lender that you are already familiar with. 
If for many years you have had savings and a checking account with one bank, you may be interested in finding out if they also offer pre-approved car loans. Also, credit card companies can be good alternatives, and you only need to ensure your card is not maxed out, and that you have an excellent history of making your payments on time.
Approach multiple lenders for information
Shopping around is critical when you want a preapproved car loan. Check several different lenders and find out the offers that they have. This will ensure that you get the best deal possible.
There are many online lenders and car finance options that can complete the whole process online. If spending time at the bank isn’t your cup of tea, online lenders might be a better alternative for you. Also, these lenders often have reduced interest rates as their overhead expenses are lower.
However, working with online lenders has a risk of sharing your personal information with other sites. It might result in being contacted with lenders you have no connection with. Choose a reliable online lender like NZC Cars. 
Compare offers. 
If you have a higher credit score, you are likely to have more options for getting preapproval for your car loan. Also, many inquiries are unlikely to injure your credit score, even if they are all for auto loans.
It’s not always a good thing to have several inquiries on your credit report within a short time, and there is no doubt that it can reflect negatively on your score. But if you are shopping for a loan product like a mortgage or car finance, the credit bureaus understand that you will only want to get the best rates. 
When comparing different car finance companies, consider their interest rates, terms of the offer, and max amount. 
If one lender gives you a better offer but you would like to work with another one, take the offer to your preferred lender and ask them to match it. When comparing loans, it’s crucial that you take APR or annual percentage rate into account, as well as the loan term.
Some people may find longer terms to be more attractive because they give them more time within which to pay the loan. But depending on the interest rate that you have agreed with your car finance provider, you could end up being charged more in interest rate than if you had opted for a shorter term.
Also, cars got through long-term loans tend to build equity a lot more slowly than those in short term. It means that, should you decide to sell the car earlier, you are unlikely to earn money enough to pay the remaining part of the loan. It’s what is referred to as being upside-down.
Conclusion
Preapproval may appear like an extra, needless step in your car-buying process. But the truth of the matter is that you stand to benefit from getting a preapproved car loan. That is why it is critical to get a preapproval. Use the above tips to get pre-approved for a car loan.
