Getting a pre-approval for car financing will help you get the best rates possible. Pre-approved auto loans also give you an advantage in car shopping, and gives you the most options. Your car shopping experience can be focused on getting the best price on a car, instead of worrying about the financing of your purchase.

Why are pre-approved loans better?

Some vendors would have you believe that getting financing with bad credit is almost impossible. Not so. By doing some research into lenders and their financing packages, you can often find near to market rates.

By getting a pre-approved loan, you get rid of one of the barriers yo face when negotiating the price of your car. With a blank check in your hand, you can buy from any dealer or person. Sellers will be much more willing to negotiate with and reduce the price to seal the deal becasue they will understand that you are not a time waster.

Start out by looking for a good sub prime lender

Most financing companies deal with prime and subprime auto loans so start out your search for finance by asking for loan quotes from various lenders. If you do not know who to ask then start out by doing some searches on the internet and check with the lenders that get decent recommendations.

When you are requesting quotes, take into account all possible terms. For example, choosing an adjustable rate loan will usually provide a lower initial payment than you will get with a fixed rate loan. Buying from a car dealer will also often get you better prices as they can set rates themselves (within reason of course!)

Look at all the fees and closing costs, not just the headline fees when comparing car loans. The APR (Annualised Percentage Rate) will give you the total cost of the loan, a good figure to use when comparing offers from several different lenders. If you plan to refinance, lean toward a low application fee loan with slightly higher interest rates. This could save you money in the long run.

Use online application forms to speed up the car loan process

Many, if not most, auto finance companies have developed online loan applications to save time and money. When you enter your basic personal and financial information into the web based form, lenders can reduce the number of staff required to process your loan and thus decrease costs and reduce the length of time to make a lending decision and offer.

As a result, you may receive a check for you car purchase in as little as five to seven days. You will also receive your loan contract at the same time. As soon as you're ready to buy your car, you only have to sign both the check and loan agreement and the deal is done!