Why Get Preapproved Before You Start Car Shopping?

Shopping for a car is a lot more fun than shopping for a loan. We get it.

But figuring out your financing before you start scrolling through listings or walking dealer lots can make the entire car-buying process easier.

Getting preapproved gives you a clearer picture of what you can afford, what your financing could look like and which vehicles make sense for your budget. Here's why it should be one of your first steps.

Start with your budget, not the car

It's easy to find a car you love and then start working backward to figure out how to make the payment fit.

Preapproval flips that around.

You'll know how much you're approved to borrow and have a better idea of what your monthly payment could look like before you start shopping. That gives you a price range to work within and can help narrow your search.

One important reminder: You don't have to spend everything you're approved to borrow.

Leave room in your budget for the other costs that come with owning a car, including insurance, fuel, maintenance and repairs.

Walk into the dealership with a starting point

Financing can be one of the biggest variables in a car purchase. If you've already been preapproved, you're not starting that conversation from scratch.

You have financing terms you can use as a baseline when you're considering other offers.

If the dealer has a financing option, compare it. Look at the APR, loan term, amount financed and overall cost, not just which option gives you the lowest monthly payment.

Preapproval doesn't mean you can't consider another offer. It means you have something to compare it to.

Keep the car and the financing separate

There's another benefit to getting preapproved first: You can focus on negotiating the vehicle itself.

Instead of trying to juggle the price of the car, your trade-in, financing and monthly payment all at once, you already have a better idea of what the financing side could look like.

That makes it easier to ask a much more useful question:

Is this the right car at the right price for my budget?