Once you get pre-approved for a car loan, you’ll be able to start shopping for a car that meets your needs and preferences. Your lender will give you a total amount that you can spend along with the interest rate and repayment terms for your loan.
Your lender may also have a list of approved dealerships that you can buy a car from, but many lenders will let you purchase your car from anywhere. If your lender doesn’t have any rules about the purchase location, you’ll usually receive a check for the maximum loan amount that you can spend, which you can use just like cash to purchase your car. If your lender has a list of approved dealerships, when you find a car you want, the dealer will get in touch with your lender to make payment arrangements.
If you want to buy a used car, there may be stricter requirements when you have a car loan pre-approval. First, your lender may require that you only purchase your used car from their list of reputable dealerships, which means you can’t go with a private seller. If you want to purchase a car from a private seller, you may need to take out a personal loan from your bank or an online lender.
Second, there may be restrictions on the age of the car and the mileage. It helps to know whether you’re going to buy a used or new car before you start the pre-approval process so you can ask your lender about the processes that are specific to either of these purchase options.