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Automotive Tips & Advice

Walking into a dealership without knowing your financial situation can feel overwhelming and impact your experience of buying a new car. This is a big, exciting purchase, and worrying if you’re able to afford the vehicle you want seems like unnecessary stress. This is where pre-approval car finance comes in. It will allow you to visit any dealership knowing what you can afford and help you get a good deal on a great new vehicle.

But why wait to visit a dealership in person? Search through our wide range of cars for sale from various dealerships across South Africa. You can also use our vehicle finance calculator to help estimate your monthly payment.

Image by Raten-Kauf from Pixabay .jpg Image by Raten-Kauf from Pixabay

Now, let’s look into what pre-approval car finance is and understand more about how it can benefit you.

What is a pre-approval car finance or loan?

In South Africa, countless new and pre-owned vehicles are being purchased each year, which makes understanding the various aspects of a vehicle loan beneficial for any potential buyer. When it comes to buying a new car, many of us will initially apply for finance, however, there are also ways to get pre-approved for a vehicle.

A pre-approval involves securing a financial institution's financial pre-approval before you actually buy a car. It provides a predetermined sum that the bank is willing to provide you. While it may seem like a waste of time, pre-approval can help you establish a budget and ensure that the financing you need is available.

How do you qualify for pre-approval?

Much like other loans, applicants must have a good credit history and be employed with a stable monthly income. They must also have a valid South African driver's licence. Once the necessary checks have been completed, the financial institution will determine the amount of money that the applicant can borrow.

Image by Crosby Hinze on Unsplash.jpg Image by Crosby Hinze on Unsplash

Interesting facts about pre-approved vehicle finance

  • Finance for new or pre-owned cars is available through a pre-approved vehicle programme. New vehicles typically have lower interest rates than their pre-owned counterparts due to their lower likelihood of claiming insurance. However, for pre-owned cars, lenders may limit the vehicle's mileage and age.
  • Knowing what you can afford will make it easier to find and buy a car that fits your budget and needs. Your pre-approved finance will give you an estimate of the amount you can borrow, as well as the interest rate and terms of the loan. However, even though you have been given a pre-approved amount, you don't have to spend all of it. You can work the estimate into your budget to see if it's feasible. If not, you'll have to spend less than the amount that you have been given.
  • The choice is narrow in the used and new car markets. There are plenty of options, but affordability will determine which vehicle you choose. If you don't know this, you might end up getting into a love affair with a vehicle that you can't afford. Keeping this in mind will make the buying process easier, as it allows you to work with a budget.
  • You can negotiate better when you go to a dealer and make use of their financing options, which are typically more expensive than your bank. If you go in without pre-approval, you might end up buying a car that you love and then taking out the finance resulting in more costs. If you decide to get pre-approved first, you will have the opportunity to negotiate with the dealer. You can use the interest rate that you have with your bank or other lenders to negotiate with the dealer. Having pre-approved finance will allow you to know what to look for in a vehicle and its price range.

Photo by Daniel Andrade on Unsplash.jpg Photo by Daniel Andrade on Unsplash

Advantages of pre-approved vehicle loan

Pre-approved vehicle financing is a great alternative to a traditional car loan. There are several advantages to this type of financing.

1. Improves your chance to obtain priority to purchase

After securing pre-approval, you can immediately start the process of purchasing a car. Since this allows sellers to give you the best possible preference, they are more likely to give you higher priority.

2. Gives you the opportunity to compare interest rates

Pre-approvals are great tools to compare the various offers from different dealers. Just complete the dealer's application and you'll be able to see what they're offering. Competitive financing can help customers finance their cars more easily and at better prices.

3. It helps to simplify the buying process

Having a pre-approved budget can also help you maintain a sensible financial situation, and it can assist you in finding the best car deal. After all, having a good pre-approved budget can help you focus on the car-buying experience instead of worrying about interest rates, deposits, and loan terms.

4. You get to save time, energy, and money

A pre-approved loan can help you save a lot of time and energy when it comes to searching for the best finance options. It eliminates the need for you to go through multiple sales pitches and the time spent adding paperwork to the process.

If you have been approved for vehicle finance, then Auto Mart is a great way to find a new car. Here you can browse through thousands of listings from verified dealerships in South Africa. You can also ask the dealer for more details about their inventory and what else they have to offer.

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