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It is a great idea to secure financing before you begin shopping for an automobile. Having an approved auto loan before you visit the dealership gives you the negotiating advantage of being a cash buyer. How do you know how much to apply for, though?
You probably already have an idea of how much money you plan on spending based on the type of car you want purchase. When applying for your new car loan, you should apply for the amount which is the maximum amount you can afford to spend. You are under no obligation to spend the entire amount when you pick out a car. In other words, if you are approved for $40,000 but purchase a car for $32,000, the loan amount will only be $32,000. It is nice to have the leeway of having a larger loan already approved, but it is also nice to know that you can spend less if you would like to.