If you’re thinking of financing a new or used car, pre-approval is an important step, along with knowing Montana auto loan rates. If you're wondering how auto loan pre-approval works, this article will help you understand.

The vehicle shopping process can be stressful, especially if you have no credit or bad credit. An auto loan pre-approval helps you know how much financing you can receive to purchase a new or used car. Pre-approval is not required when financing a car, but if you have financing in place before shopping, you’ll have an idea of what you can afford. If your loan is not pre-approved, you may get declined when you work out financing and car loan terms.

Although pre-approval isn’t necessary, it’s an important step for a worry-free dream car shopping experience. Research Montana bank car loans and Montana bank auto loans before choosing a lender and applying for pre-approval.

How Can I Get a Pre-Approved Auto Loan?

You have several options for auto loan pre-approval, and selecting the right one is a personal choice:

• Visit a dealership and submit a loan application to the finance department
• Let an outside lender review your application, determine how much you can afford to spend, and decide your interest rate
• Obtain pre-approval from a bank or credit union to use as a bargaining chip

Before you apply for an auto loan pre-approval, be sure you understand the following:

You’ll Need Proof Of Income

Any bank, credit union, or dealership will need your proof of income in order to verify and pre-approve your auto loan application. In the application, you’ll state your gross monthly income or annual salary and provide tangible proof of your income. This proof may include a recent paycheck — or if you’re self-employed — two years of tax returns. Other documents such as retirement income, disability income, alimony, and child support can also be used.

You Need to Know Your Credit Score

Your credit score is an important determining factor for your auto loan pre-approval, so it’s important that you’re informed. Proof of income alone is not enough to qualify for an auto loan. Your credit score gives your lender insight into your payment habits and debt-to-income ratio. Even if you have a good salary, significant debt and little disposable income could lead your lender to reject your application.

Do Your Research And Compare

When looking for an auto loan, always do your research by contacting multiple lenders and comparing interest rates. You can obtain multiple pre-approvals without hurting your credit score — just remember that actually applying for multiple lines of credit can hurt your credit score. If you’re worried about applications harming your credit score, take note that all auto loan applications occurring within 30 days of a credit score recalculation count as only one inquiry.

Getting an Auto Loan in Montana

Getting pre-approved removes uncertainty from the vehicle-buying process. And when you're in the process, you should also understand Montana auto loan rates. This knowledge will come in handy when you apply for pre-approval. To learn more, contact Whitefish Credit Union.

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