![]() When asking for the price on the car, you can simply ask, "What's the 'out-the-door' price on this car?" This helps you keep focused on the actual selling price of the car rather than keeping track of the interest rate, down payment, loan term and trade-in. It simplifies negotiation: Once you're preapproved, you can shop for the car as if you had a check in your pocket.We keep track of these advertised rates on the incentives and rebates page on Edmunds, and it's a good idea to check them. Automakers often offer highly subsidized loan interest rates as a means of getting people to finance with them. You can either tell the dealer you're not interested or fill out the dealer's credit application to see what's offered. It is likely that the dealer will try to beat the interest rate you already have. It allows you to compare interest rates: There's no guarantee that you'll get the best rate by getting preapproved, but at least you'll have a baseline with which to compare the rates that dealerships offer you.In other words, if you have been approved for a $30,000 loan, try searching for something that costs a few thousand dollars less. Keep in mind that you will need to account for taxes and other fees. It encourages you to stick to a budget: A preapproval notice will let you know exactly how much you can spend.But there are good reasons to take a little extra time to get a preapproved car loan: Preapproval might seem like an extra step in the car-buying process (which already has plenty of them). If you wanted to buy a used car from a private seller or independent dealership, you would have to take out a personal loan, which usually carries much higher interest rates. The vehicle must be 10 years old or newer and can't have more than 120,000 miles on the odometer. Capital One, for example, says borrowers can only finance up to $40,000. ![]() There are also restrictions on the age and mileage of the vehicle. This rules out buying from private-party sellers and independent dealerships. Most lenders will specify that the car must be purchased at a franchised dealership. The requirements for buying a used car are slightly different. Once you've found the right car for you, hand over your check and the dealer will make the arrangements with your lender. With this check in hand, you can visit multiple dealerships and test-drive as many cars as you want before making a decision to buy. The check isn't truly blank: Its maximum amount will be the one for which you qualified. If you are undecided about what new car you want, many lenders will give you a sort of "blank check" that isn't limited to a certain car or dealer. Some lenders have a list of approved car dealers, so make sure you verify that the dealership at which you're shopping is on it. If you know the exact new car you want to buy, you negotiate for the car as you normally would and the dealer will get in touch with your lender to arrange payment. What you do next will depend on whether you are buying a new or used car. Once you're approved, the lender will give you the total you can spend and the interest rate for which you were approved.
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