Understanding Car Loan Pre

These days, many drivers are opting for car loan pre approval as an option for figuring out financing before going to the dealer's lot. Here are some basics on understanding how this kind of financing works.

• Drivers shop around for financing - when a consumer wants to buy a new or used vehicle, he or she is not limited to financing from the dealer. Any number of third-party lenders can arrange for auto financing, and when the shopper gets one of these lenders to "clear" them for a certain amount before visiting the dealer, that's called car loan pre-approval.
• Lenders may want to know vehicle information up front - many lenders who are financing auto loans like to have the year, make and model as well as other information about the vehicle in order to approve a loan.
• Your credit is always an issue - it's not just dealer representatives who use your credit score to figure out what kind of financing they will approve for you. Third-party lenders do the same. It's always good to research credit scores and ratings before talking to any lender.
• A third-party lender is no less of a "middle man" than the dealer - some drivers might be under the assumption that it's much more efficient to go to the dealer for financing. However, some financial experts report that the opposite may be true-dealers, after all, arrange for financing through other outside lenders anyway. There's also the issue of a "dealer markup" where consumers claim that some dealers raise the interest rates on a loan to get their own cut of the revenue, on top of what they're getting by selling the vehicle.

Keep these items in mind when looking for financing for your next new or used vehicle.