At a Glance

Receiving preapproval for a car loan can help take the guesswork out of the process by allowing you to see the rates you would be offered, along with estimates on total monthly payments. Credit unions, banks, and online lenders typically all offer preapprovals, so it’s worth reaching out to see if this is something offered.

What is a preapproved auto loan?

For those unfamiliar with the term, a preapproved auto loan is essentially an application you have filled out for the loan that has already been approved. They will share loan information that you can then share with potential dealerships from which you wish to purchase a car.

The lenders preapproved offer will expire in 90 days, on average, which is why preapproval is such a beneficial option. Receiving preapproval will allow you to know the exact loan amount you are approved for which can help tell you which cars are within your budget.

Requirements of auto loan preapproval

The process to get preapproved for a car loan is the same as any other loan application. To apply, you will need the following:

  • Loan information such as amount and purpose
  • Personal information such as your address, social security number (SSN), employment history, etc.
  • Income history such as current employer, gross annual income, and any other streams of income

After submitting all the above information, the lender will use it to check your credit history and then will decide on the loan.

Difference between a car loan preapproval and prequalification

Auto loan preapproval and prequalification sound quite similar at first glance, but they are different. While getting preapproved for a car loan involves a hard check on your credit and the terms you are offered are locked in for a set period, prequalification isn’t so absolute. You still submit your information like how you would for a preapproval, but a lender will not run a hard check on your credit score.

Without this hard check, lenders will only be able to offer you a prequalification, which is essentially proposed terms for the loan based on what you provided. It may be different than what is offered should you submit a full application, but it will likely be similar.

Related: Hard Credit Inquiry

Benefits of auto loan preapproval

There are a few primary benefits to auto loan preapproval that make the process worth it. Here are some of the highlights:

  • You know what you can purchase: The terms of your preapproval are locked in for a certain amount of time, meaning you know exactly how much you are approved for with a loan. This helps you know which vehicles are within your budget when shopping around.
  • You can share the locked-in rate with the dealership: Dealerships often offer their own financing, but if you have yours locked in already you can share the rate with the dealership to see if they can beat it.
  • Preapproval of car loan can be done on your time: Getting preapproved for a car loan means you can take time shopping around for different rates, rather than settling on a rate in the spur of the moment

How to get preapproved for a car loan

Getting preapproved for a car loan is a simple and easy process:

  1. Organize the loan information such as amount needed
  2. Gather all pertinent financial and personal information such as income, address, employment history, and more
  3. Double check your credit score
  4. Search around for different lenders and submit for prequalification to see who may offer the best rate
  5. Once a lender is selected, submit your preapproval application and see whether you are approved or not

Where can you get preapproved for an auto loan?

In the process of wondering how I get preapproved for a car loan? you likely asked yourself who offers preapprovals. Fortunately, preapprovals for all types of loans are extremely common. The three primary lenders (banks, credit unions, and online lenders) all usually offer loan preapprovals. Reach out and inquire as to whether this is a service they provide.

Related: Using Personal Loans to Buy a Car

Tips for negotiating using an auto loan preapproval

As mentioned earlier, one of the benefits of getting preapproved for an auto loan is that you can use your preapproval as leverage when negotiating at a dealership. Dealers may try to offer you a lower interest rate after you tell them what you have been approved for by an external lender.

Additionally, dealerships may try and offer you extended terms for the auto loan that, while increasing the amount of interest you pay overtime, would potentially reduce your monthly payments. Be strategic when telling dealerships about any preapprovals you have.

What to do if you get denied for auto loan preapproval

While getting denied for an auto loan preapproval can be discouraging, it isn’t the end of the world. Use this as an opportunity to practice healthy financial habits such as double-checking your credit score, improving your debt-to-income level, and reviewing your application for any potential mistakes you made on it.

Rather than immediately applying somewhere else, take the time to figure out what went wrong with your first preapproval application to see if it’s an easy fix.


Should I get preapproved for a car loan is at the top of everybody’s mind when shopping for a new vehicle but receiving the approval can be confusing. While a preapproval does guarantee a car loan at that amount assuming you respond and apply to the preapproval, it may change if there are significant financial or credit changes from the time of first approval.

Yes, if there are significant changes to your finances or credit score from the time between the preapproval application and standard application, it may be denied.

Yes, you should be able to get preapproved for a private party auto loan.

Yes, you can get a preapproved loan to buy a new or used car.