Does Pre Approval Guarantee an Auto Loan?

Getting a car loan could mean that you would be able to finally get that car you have always dreamed of. However, there can be some form of confusion when you get pre-approved for a car loan. What does this mean? Does this guarantee that you already have a car loan? The answer to that question is simply no. 

In the United States and the entire world in general, when you have gotten the pre-approval for a car loan, this simply means that you have been looked at by the bank or financial institution who intends to give you that auto refinancing and they feel you meet all the requirements. However, the fact they have confirmed that you are qualified does not mean you have approval yet. To help understand this better, let us consider both terms very carefully as related to car loans.

The Pre-approval

When you have been pre-approved, this simply means that the application which you submitted to your financial institution has been examined. This would most likely include your financial background. That screening has given that lender the assurance that you would be able to pay back the loan if it is given to you. A pre-approval is mostly given when the individual looking for the loan has already pinpointed the particular car which they would love to have.

This is also a way to improve the trust the car-dealer has for you. It allows them to see that you are financially capable of purchasing the car and you would soon be fully backed by a financial institution. Let us take a look at what approval means.

The Approval

The approval is exactly what the name indicates. It means that your loan has been approved and is available to you to buy the car you wish to get. The approval is usually complete after all the necessary documentation and paperwork has been completely taken care of.

It is important to note that all car loans are not the same or uniform in nature. It is, therefore, going to be a terrible mistake to think that a pre-approval is the same as being approved for a loan. Instead, it simply serves as a way to show how capable you are financially to make payment if you should eventually purchase the car with affordable monthly payments.

Conclusion

Having the right knowledge and understanding about what approval and a pre-approval is would guide you in all the decisions you have to make concerning a car-loan deal. It would also ensure that you do not embarrass yourself in front of a car dealer who fully understands the meaning of the terms. Getting your car loan deal would be smooth and successful as a result. Learn more about pre approval from https://en.wikipedia.org/wiki/Pre-approval.

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Charles Brighton Joined: August 13th, 2019