Critical Auto Buying Mistake: Only 44% of New Buyers Plan To Get Pre-Approved
According to a recent study conducted by the folks at Kelley Blue Book, only 44% of prospective new car buyers plan to get pre-approved for a loan before buying. While that isn’t overly surprising, it remains a critical mistake…one that can cost the consumer a great deal of money and time.
The recent credit crisis made it more difficult for buyers to get pre-approved in 2009 and most of 2010, but that is changing rapidly. During that period, most of the manufacturer’s lending arms tightened up their credit underwriting criteria, making it more difficult to get on-site credit, which helped add to the decrease in vehicle sales. The economy was struggling and most financial institutions limited the amount of new auto loans they accepted.
As we progress through 2011, the doors have opened back up as banks and other lending institutions have broadened their scope with a renewed interest to take on consumer vehicle loans. In addition, the manufacturer lenders have returned strongly, and consumers are finding a much more credit friendly landscape, with better rates, and easier approvals.
With this being the case, the KBB study indicates that two thirds of in-market buyers plan to finance some or all of their next purchase, and while 64% plan to use the internet to research their finance options online, only 44% plan to “obtain vehicle financing pre-approval”.
The case for getting pre-approved:
Time and money. Period.
1) By getting pre-approved, you know how much you can spend and, therefore, what car is in your price range and how much you can afford.
2) You can now spend your time negotiating on price and with confidence instead of sitting at the salesman’s desk or in the manager’s office waiting to hear if you qualify for financing, and what your rate will be. As a pre-approved buyer, the dealer understands that you are a serious shopper and ready to purchase.
Getting pre-approved (if you qualify) is one of the most important steps in helping you get the best deal. Even if the dealer can provide you better financing options at the dealership, at least you know you have done your diligence and evaluated multiple options.
For more information on the KBB study, click here >>