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The Benefits Of Pre Approved Car Loans

mahindra-finance-author

by Mahindra Finance

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May 8, 2024

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5 mins read

Getting Started

Are you in the market for a new car? Buying a car is an exciting experience, but it can also be overwhelming, especially when it comes to arranging financing. However, with a pre approved car loan in hand, the car-buying process can be easy. 

Here, we will explore the numerous benefits of getting a pre approved car loan. We will also look into how a car finance pre approval can simplify your car financing journey.

1. Improved Negotiation Power

When you have a pre approved car loan, you are no longer reliant on the dealership's in-house financing options. This gives you improved negotiation power when it comes to discussing the price of the car. The dealership knows that you are a serious buyer who has already secured financing.

2. Better interest rates

Lenders often offer lower interest rates to borrowers who have been pre-approved for a car loan. It is because pre-approved borrowers are considered low-risk since they have already undergone a thorough credit check and have been deemed creditworthy.

3. Reduced stress

Pre approved car loans take away the guesswork and uncertainty. It provides you with a clear understanding of how much you can borrow and at what car loan interest rate.

4. Faster Turnaround Time

Since you have already undergone the credit check and loan approval process, finalizing the loan becomes quicker and more efficient. Just like a pre approved car loan, car finance pre approval speeds up the purchase process.

5. Ability to Compare Financing Options

Getting pre approved for a car loan gives you the flexibility to explore various lenders and their rates. It expands your choices beyond what the dealership offers.

6. Fixed Interest Rates

Pre approved car loan often comes with fixed interest rates, meaning the rate remains unchanged throughout the loan tenure. With car finance pre approval, you gain stability, enabling effective budgeting and planning of your monthly car payments.

7. Lower Monthly Payments

Pre-approved loans frequently offer lower interest rates than those available through dealership financing options. As a result, your monthly payments are likely to be lower.

8. Improved budgeting

A pre approved car loan helps you set a realistic budget based on your borrowing capacity and repayment capabilities. With a clear understanding of how much you can borrow and at what rate, you can avoid overspending or taking on excessive debt.

9. Car Loan Benefit in Income Tax

In India, tax deductions on car loans are mainly for business owners and self-employed individuals using the car for business. Personal car loans don’t offer tax benefits. However, there are various income tax benefits for car loans related to business, that allow you to deduct the interest portion of your EMI as a business expense, lowering your taxable income. You can also calculate it with an car loan EMI Calculator. However the principal repayment isn’t tax-deductible.

10. Flexibility

Pre approved car loans offer flexibility. While they are not binding, they provide you with the freedom to use them when you find a car that meets your requirements. This allows you to shop around, compare financing options, and make an informed decision based on your needs and preferences.

Conclusion:

Car finance pre-approval complements the benefits of a pre approved car loan. If you are considering buying a new car, it is worth exploring the option of getting pre-approved for a car loan, as it simplifies the financing process and helps you make informed decisions. Mahindra Finance offers pre approved car loans, providing a range of benefits to its customers. By partnering with Mahindra Finance, you can benefit from our competitive interest rates and flexible repayment options.

FAQs:

Q: How do I get pre-approved for a car loan?

A: To get pre-approved for a car loan, you need to fill out an application with a lender, providing information about your employment, income, and credit history. The lender will then run a credit check and determine the loan amount and interest rate you qualify for.

Q: Can I use my pre approved car loan to buy any car?

A: Yes, once you are pre-approved for a car loan, you can use it to purchase any car within your approved loan amount. It provides flexibility in choosing the vehicle that best fits your needs and preferences.

Q: What documents do I need for a pre approved car loan?

A: The car loan eligibility & documents required may vary depending on the lender. Generally, you will need proof of identity, address, income, and employment. It is advisable to contact the lender directly or visit their website to find out the specific document requirements.

Q: Does applying for a pre approved car loan affect my credit score?

A: Applying for a pre approved car loan results in a 'soft' credit inquiry that does not negatively impact your credit score. However, if you choose to proceed with the loan offer and complete the formal application process, it may result in a “hard” credit inquiry that could have a slight impact on your credit score.

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