Getting pre-approved for a car loan can make buying a car a smoother and easier experience. It helps you know how much you can spend and shows the seller that you are a serious buyer. But when looking for pre-approval on a car loan you should not… not make some very common mistakes that could cost you money or even stop you from getting the loan at all.

This article will explain five major things you should not do when applying for pre-approval. It’s written in simple terms so even a sixth-grader can understand it, but it’s filled with smart advice that can help anyone looking to buy a car.

Always Check Your Credit Report First

Before you do anything, it’s very important to know what your credit report looks like. This report tells lenders if you are good at paying back money you borrow. When looking for pre-approval on a car loan you should not… not skip checking your credit.

You can get a free credit report once a year from AnnualCreditReport.com. Look over the report carefully. Are there mistakes? Are there late payments or big debts listed? If you find problems, you can ask to have them fixed. Fixing just one mistake could help improve your credit score, which means a better loan offer for you.

Your credit score affects your interest rate. A higher score means you pay less money over time. For example, someone with a score of 750 might get a 5% rate, while someone with a score of 600 could get a 12% rate. That difference can cost you thousands of dollars!

Don’t Apply to Too Many Lenders at Once

When looking for pre-approval on a car loan you should not… not send out many loan applications to different banks or lenders all at once. Each time a lender checks your credit, it’s called a “hard inquiry.” If there are too many of these in a short time, your credit score might go down.

If you want to check with more than one lender (which is a good idea), do it within a short time—about 14 to 45 days. Most credit scoring systems will count all those checks as one inquiry if they happen around the same time. This means you can compare offers without hurting your credit too much.

Think of it like shopping for shoes. You don’t want to try on 50 pairs in 10 stores on 10 different days. It’s better to check your top choices quickly and make a smart decision.

Don’t Forget to Set a Realistic Budget

Just because a bank says you can borrow $30,000 doesn’t mean you should. When looking for pre-approval on a car loan you should not forget to create a budget that fits your life. Think about how much you can really pay every month without hurting your ability to pay for other things like rent, food, and savings.

Experts say your car payment, including insurance and gas, should not be more than 15% to 20% of your monthly income. If you make $3,000 a month, you should keep all car costs under $600. That way, you’ll still have money for other important needs.

Also, remember that cars come with extra costs. Oil changes, repairs, and insurance can add up. A cheaper car that is reliable might save you more money than a fancy new one with a high loan.

Don’t Overlook the Loan Details

When looking for pre-approval on a car loan you should not… not just pay attention to the monthly payment. That’s just one part of the story. You also need to look at the full length of the loan, the interest rate, and if there are any hidden fees.

For example, a low monthly payment might seem good, but if the loan lasts for 7 years, you’ll end up paying much more in interest. Or maybe the lender charges a fee if you want to pay off the loan early. These small details can make a big difference in how much the car really costs you.

Always read the fine print. If you don’t understand something, ask. It’s better to ask a simple question now than to pay thousands more later.

Don’t Rely Only on the Dealership for a Loan

Some people wait to get a loan until they are already sitting at the dealership. But when looking for pre-approval on a car loan you should not… not rely only on what the car dealer offers. Dealers often try to sell you a loan that makes them money, not one that’s best for you.

Sometimes dealers raise the interest rate or add extras you don’t need, like special insurance or protection plans. If you already have a pre-approval from your bank or credit union, you have more control. You can compare the dealer’s offer with the one you already have and choose the better one.

Having a pre-approval makes you look like a cash buyer. Dealers know you’re serious and are more likely to give you a better price on the car.

Real Example: How One Mistake Cost a Buyer $2,000

Let’s look at what happened to Ryan, a 26-year-old first-time car buyer. Ryan didn’t check his credit score and didn’t know he had a late payment from two years ago. He applied at three different lenders over two months, each time getting denied or offered a high rate.

He finally accepted a dealership loan with a 14% interest rate for five years. A week later, his friend helped him check his credit and clean up the error. Ryan got approved at a credit union for a loan at 6%. But because he had already signed with the dealership, he had to stick with the bad deal. That mistake cost him over $2,000 in extra payments.

Final Thoughts: Be Smart Before You Buy

When looking for pre-approval on a car loan you should not rush or skip important steps. A little planning can save you a lot of money. Check your credit, shop around for the best rates quickly, make a solid budget, read all loan terms, and get your pre-approval before visiting a dealership.

Buying a car should be exciting, not stressful. By avoiding these common mistakes, you’ll make better choices and feel good about your purchase—for years to come.