Shopping for a new or used vehicle can be exciting, but it can also be stressful. You may spend a lot of time researching and comparing cars, visiting dealerships, and taking test drives. You might even calculate whether a certain vehicle fits within your budget. But after all that effort, it can be devastating if a salesperson tells you, “Sorry, you haven’t been approved.”
Not only is it disappointing, but it’s also embarrassing and can feel like a waste of time. Thankfully, you can avoid this situation by getting pre-approved for a car loan before you start shopping. Regardless of your financial situation, whether you have excellent or bad credit, getting a pre-approval is a smart move.
But how does car loan pre-approval work in Canada?
How Car Loan Pre-approval Works
A car loan pre-approval operates similarly to other types of loan pre-approvals, like mortgages. The lender reviews your income, debts, and credit score to determine if they’re willing to offer you a car loan. If you’re pre-approved, the lender will inform you of the maximum loan amount they’re willing to provide, along with a potential interest rate. These terms are likely what you’ll receive if you proceed with financing a specific vehicle.
You might also get an estimate of your monthly or bi-weekly payments. If this information isn’t provided, you can use a car loan calculator to get a rough idea in seconds.
Most lenders don’t require a driver’s license, proof of income, or a hard credit check until you decide to proceed with a specific vehicle. However, they may ask for additional identification verification, such as a utility bill with your name and address.
Benefits of Car Loan Pre-approval
Having a pre-approval in hand allows you to shop for a vehicle with confidence. You’ll know exactly what you can afford, so you’ll only consider vehicles within your budget. It also eliminates the stress of securing financing after finding the perfect car. There are several other advantages to getting pre-approved for a car loan.
Where to Get Pre-approved for a Car Loan
There are several ways to get pre-approved for a car loan. Traditionally, most buyers have obtained pre-approvals through dealerships, which may have in-house financing or a network of lending partners.
Another common option is to get pre-approved through a bank or credit union. If you work with your own bank, the process can be more straightforward since they already have most of your information on file. However, if you have a low credit score, some dealerships, banks, and credit unions may be reluctant to work with you.
Getting pre-approved online is becoming increasingly popular, either through an online lender or vehicle retailer. The benefit of online pre-approval is that it’s quick and requires little effort; you can often complete the process in just a few minutes from the comfort of your home. Additionally, some online providers, like Canada Drives, are connected with a variety of trusted lenders, including some of the Big Five banks, making it easier to secure the best rate regardless of your credit situation.
How Long Does a Car Loan Pre-approval Take?
The time it takes to get pre-approved for a car loan can range from a few minutes to several days, depending on the lender and the day of the week. Traditionally, lenders require at least one business day to complete the process, so if you apply on a Friday, you might not receive a decision until after the weekend.
If you’re going through a dealership, bank, or credit union, the pre-approval application may need to be completed in person, although it can sometimes be done online or over the phone. During the process, the lender may request additional information, such as a mortgage statement or utility bill. Overall, it might take up to a full business day to find out if you’ve been pre-approved and for how much.
With online lenders and vehicle retailers, the pre-approval process is much faster. You can fill out a short application online in just a few minutes and receive a pre-approval decision almost instantly.
Can I Get Pre-approved with Auto Lend Experts?
Absolutely! Auto Lend Experts can get you pre-approved for a car loan online in minutes.
With your pre-approval in hand, you can shop with confidence and less stress, knowing your exact budget. This way, you won’t have to worry about any last-minute financing issues.