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Before you decide to step onto a car lot, get pre-approved with your financial institution. Getting the approval first puts you in the driver’s seat to negotiate and focus on the features of your new vehicle. 

Here’s how: 

You’ll Know What You Can Afford 
Buying a car is exciting. It’s easy to get caught up and stretch your budget to get what you want. A stretched budget can also put a strain on your finances. Getting pre-approved lets you know up front what you can afford. It also gives you an idea of your qualifying interest rate. Dealers may advertise zero percent financing, but you can’t count on qualifying for that incentive.

Getting pre-approved is a quick and easy process. It does not obligate you to a loan. It simply lets you know what you can afford, your qualifying interest rate, and what that will look like in terms of monthly payments. By taking the pre-approval step first, you are eliminating any last minute roadblocks that may impact your purchase. 

You’ll Have a Game Plan 
Once you know what you can afford, it’s much easier to start shopping. It’s always best to do your research on vehicles before you actually visit the lot. You’ll be able to narrow your focus to specific vehicles within your budget and the features you value most. This will reduce the chance of being distracted by something you can't afford. 

Be ready to enter the dealership with two goals in mind: 

1. To get a fair price for the vehicle
2. To get the lowest interest rate possible

You Can Harness Your Negotiating Power
Now that you’re pre-approved and confident in your research, you can shop like a cash buyer. When you find a vehicle that falls within your budget, don’t miss the opportunity to negotiate the price. Let the dealership know you do not need financing. You already know what you can spend. 

In fact, the only thing the dealership will need to focus on is whether they can meet your asking price for the vehicle. This is why cash deals are better because there is a sole focus on the price, not the monthly payment which can be manipulated through several factors such as term of financing and interest rate.  

With a pre-approval from your financial institution, research and a game plan, you can negotiate confidently to find the vehicle that best suits your budget and needs. Being fully prepared puts you in a position to make smart financial decisions.