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How to Get Pre-approved for a Car Loan

Man Holding Keys to New Car

You’re driving down the road and your engine light comes on again! The thoughts that run through your head might include “I think it’s time for a new vehicle,” “Will I get approved for a car loan?” “What’s the minimum credit score for a car loan?” “What will a new payment look like for me?” “Can I even afford to buy a vehicle?”

Don’t get frazzled. Take it step by step, starting with getting pre-approved, which lets you know how much you can afford before you walk into the car dealership. The first step in getting pre-approved is checking your credit report for inaccuracies. You’ll need to do this before you talk to your local credit union. Nowadays you can get free monitoring services so you can keep on top of your credit. This allows you to see your payment history, the amount of credit you have, new credit inquiries, and your credit score.



Check your credit report

It’s important to check your credit report to make sure that it is complete and does not contain any errors. Keep in mind that credit reporting agencies use different models to calculate credit scores. Your score also fluctuates constantly, so your score on one day may not be the same as your score the next day. In other words, if your credit monitoring service tells you that you have a score of 800 and your financial institution tells you that you have a score of 780, they may both be correct.


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Collect your information

What will your credit union or bank need in order to pre-approve your loan?

  • Pay stub(s) or tax returns
  • Honest insight into credit issues you may have had in the past
  • Documentation of current credit report disputes
  • Verification that you have paid in full any collection account(s) on your credit report that show you owing money
  • The amount you can offer for a down payment


Determine what you can afford

Before you purchase a car, you should think about what kind of monthly payment you can comfortably afford each month. Don’t overestimate what you can afford. Remember, you will need to have enough money to pay for tires, oil changes, repairs, etc. Starting a separate savings account for any upcoming repairs and yearly maintenance will help you out down the road.

Your financial institution will ask you how much of a loan you need. Start off by asking how much you can borrow to end up with the specific monthly payment you can afford. When you speak with your lender, talk about your financial situation so they can help you make a sound financial decision.


Ask good questions

Once you’ve received pre-approval, make sure you understand the loan and all the options open to you. Some questions you might want to ask include:

  • How long is the pre-approval good for?
  • What are the rate and term of the loan?
  • Do you offer any rate discounts for being a loyal member of the credit union or bank?
  • Do you work with any car dealerships?
  • Do I have to finalize the paperwork with the credit union or bank, or can I just close the loan at the dealership?
  • If I close the loan at the dealership, will they pull my credit again?
  • Can I add Mechanical Breakdown or GAP insurance to the loan? If so, what affect that have on my monthly payment?
  • If you have a high interest rate, you can see if your financial institution offers any advice to help improve your credit score. Once your credit score has improved, you can ask to reprice your auto loan, which you may be able to do at no extra cost.
  • If you are buying a hybrid vehicle, see if your lender has any incentives or knows about any available rebates.


Start looking for a new car!

Once you have been pre-approved, you are good to go. You can reference websites like, where you can search the inventory by vehicle type, make, or model. You can search by price range, maximum mileage, and even the color. Once you have found the vehicle you are interested in, you can email them from the website, which will save you time. What a convenience that is!

If you choose to go directly to a dealership, you will be able to tell the salesperson how much you are pre-approved for so they can direct you to the vehicles you can afford. Finding out how much you are pre-approved for is helpful so you are not looking at vehicles you can’t afford and won’t get disappointed when you can’t buy something you really like.


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About Christine Davidson

Christine Davidson is a former employee of VSECU. She has two children and lives with her husband in Northfield.
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