Financial Topics & Tips
Why Should I Get Preapproved for a Loan?
For a large purchase, such as a home or car, having that preapproval in hand before you start shopping is crucial. A preapproval is a written letter from a lender specifying how large of a loan you will be eligible to get. The letter will also detail your estimated interest rate on the loan.
Here are some other key advantages of getting a preapproval:
1.) You’ll know what you can afford
Having this information in hand will simplify your search. It will also help you avoid disappointment later. Be sure to calculate other monthly costs, such as property taxes, home insurance and increased auto insurance rates when determining the amount of money you’ll need to shell out each month.
2.) Don’t get taken for a ride
When you’re unsure about how much you can spend on a car, the dealer will capitalize on your uncertainty by trying to sell you a car that barely skims the maximum amount you’ve told them you can afford. They may also focus only on a monthly amount you can afford. They may also try to inflate the payment with unnecessary charges because they fit within your named payment amount.
In contrast, when you show the dealer your preapproval letter, they will have to show you cars with price tags that fit that loan amount.
3.) Be taken seriously
A car dealer will take you more seriously when you walk in with a preapproval. Having that information in hand shows you’re ready to buy.
When purchasing a home, a realtor will be able to assist you more efficiently when you know exactly how much house you can afford. They also may give you better service since you’re showing that you’re serious about buying a home. In fact, many realtors will only work with a buyer who has obtained a preapproval.
4.) Know you have financing you can trust
When you show up at the car dealership with a preapproval from your credit union, you know the deal is in your best interest. Many dealers have access to several financing options and may offer you options that benefit their best interests rather than yours.
5.) Purchase your dream home
A preapproval helps you stand out from the pack. If you’re house-hunting in a competitive market, having your preapproval will give you a leg up on bidding wars. A seller will be more eager to work with someone who’s already started the mortgage process.
If you are in the market for a new home, car or are considering refinancing… Don’t forget to call 800-622-2535, click, or stop by one of The Tennessee Credit Union branches to learn more about our great rates on mortgages, auto loans and personal loans!