Before you get the keys, get the right financing.

Why don’t consumers think about auto loans as products? Just like the cereal at the store or the gas in your tank, that’s exactly what they are; a service provided to you for which you pay a fee. And just like food or fuel, when it comes to finding the right deal, it pays, and then some, to shop around a bit.

Why Pre-Approved?

There’s nothing wrong, per se, with getting your auto financing from a car dealership. But there are factors at play that are worth considering. The first is that the dealership is basically a specialized retail arm of one, or perhaps two or three, banks or financing companies at most. Think of it as a convenience store for your car loan; it’s handy, but you’re going to pay a little more for the ease of use.

Looking for pre-approved financing elsewhere is like going to the supermarket; you’ll be able to see a lot more choices, and be able to pick out the best one for you. You’ll have the time to sit down and do the math for each loan instead of having to pick what sounds good in the heat of the moment.

In fact, the auto loan market has exploded over the last few years, because it’s a fairly easy market for banks to cover. Why? Cars are tangible assets with a set value, almost everybody buys one, the amounts loaned out per borrower are much smaller than with homes, and car buyers are consistent and on time with their payments as a rule.

What’s the benefit in the car-buying process for you if you get a pre-approval first?

Pre-approved financing is the first step to getting behind the wheel.

Ways Pre-Approval Makes Car-Buying Easier

One of the disadvantages to buying a car and getting your financing from the dealership is that it complicates the whole process. You’re not just buying something costing thousands of dollars; you’re also buying a product inextricably tied to that object and haggling over the price you’ll pay for the convenience of the loan.

So, the first advantage of pre-approved financing is that it strips out a level of negotiation. Both you and the salesperson, likely to the relief of both of you, can simply focus on the car and what you want to pay for it.

A pre-approval also offers you a psychological advantage in the sense that if you can’t come to an agreement on the car, you can simply get up and leave, whereas if you’ve already committed to the car, it’s harder, psychologically, to walk away over a gap between where you want the financing to be and what the dealership can offer.

A pre-approval also lets you shut down upsells and other tactics that may distract you from getting the car you want. Sales teams will know, if you come in with pre-approved financing, that they just have to sell you the car you want. It’s also a good fiscal discipline tool if you’re a bit too enamored of technology or can be a little impulsive when working out the details of a purchase.

Pre-approval also offers another key advantage. It’s easier to shop for cars online without having to look at financing. Once you get your financing arranged, subscribe to get alerts on vehicles in your area.