Not sure where to begin when looking to finance a car? Want to know what a pre-approved loan is? Read our guide below!
What is pre-approved car finance?
When you have a pre-approved loan, you have your finance application approved before visiting the dealership. It gives a provisional acceptance decision and the data you offer throughout the application process determines this.
Through a car finance broker, you might receive pre-approval for a car loan online in a matter of minutes. Pre-approved loans provide a guaranteed annual percentage rate (APR), giving you assurance about the potential interest rate on the loan.
How do pre-approved car loans work?
The pre-approval procedure is pretty simple. You can do it on the phone, in person, or online. Simply fill out an application with some basic information about yourself and your financial circumstances, this will help our brokers.
One of our team members will analyse your initial application to see if you qualify for financing from any of our lenders. If so, we’ll get in touch with you and handle the remaining aspects of your car financing process.
How does pre-approval for car financing work?
- The acceptance of your loan but, you haven’t yet received any funds.
- Although you can apply for a loan, lenders will accept you when you give more details.
- Lenders frequently need more information, such as your present financial situation or confirmation of your salary.
Getting Pre-approved car finance
- Speak with a financing broker who can offer rates from various lenders. This is a fantastic way to see your options available.
- Send over any key information, such as your name, contact information, employment history, and financial situation. Plus, your place of residence over time.
- Pass a soft credit check: the details you offer will help creditors assess your ability to make regular payments.
Lenders may ask for further information to verify your identification and financial situation if you were pre-approved for car financing. In the future, hard credit checks may evaluate your financial situation in the future.
What does pre-approved mean?
Any sort of loan that a lender preview is a pre-approved loan. This indicates that the bank has reviewed your information and determined that you qualify to receive a specific sum of money. the bank then passes your information onto the lender, who may ask for a bit of extra information.
Several lenders offer pre-approved loans. You may be able to get lower interest rates if you finance your car purchase with a loan. This makes it easier for lenders to accept your credit check and review your application.
UK loans with pre-approval
Did you know that a lot of people have pre-approved loans? Some financial companies will review your credit history before deciding whether or not to give you a loan. That’s why it’s called “pre-approved” for a loan.
Credit score check
A credit check is a lender’s evaluation of your financial standing. The first step in getting car finance is to determine whether the lender can provide you with financing.
You must submit some basic information about yourself when performing a credit check, such as your income and employment situation. Lenders may question you about any loans you still need to repay. If lenders have more information about you, it will be simpler for them to evaluate your creditworthiness.
Your credit check normally takes a few days to complete, while it occasionally may take longer or less time. In order to verify your creditworthiness, creditors must have enough time to review your entire financial history. It’s a good idea to check your credit score before applying for credit, so you’ll know what to expect.
If you qualify, congratulations! Your chances of getting a car finance loan will increase. If not, there is still a chance. Numerous lenders offer opportunities for poor credit car loans, but it’s better to wait a while between applications. Applying for multiple credit products at the same time could have a negative effect on your credit score.
Pre-approved hire purchase and personal contract purchase
These are two of the most popular methods of car financing in the UK. Due to their accessibility, these loans are frequently used to finance vehicles. When requesting these forms of car financing, you could get pre-approved.
The following are the primary distinctions between HP and PCP finance when considering these kinds of car loans:
- HP: With Hire Purchase agreements, you are required to regularly make repayments over a predetermined length of time
- PCP: Personal Contract Purchase agreements let you take out a car loan and repay it over a period of time. At the completion of the contract, you can either exchange the vehicle or buy it after making a last “balloon” payment.
It might be worthwhile to attempt to get pre-approved for a loan if you’re shopping for a new car. The process is quick and easy, and there are many benefits. There are numerous advantages, and the process is quick and simple. Additionally, having better rates to pick from if your application has been pre-approved may help.