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5 reasons to get preapproval before visiting the dealership

Looking for the best auto financing rate? It's all about that preapproval.

If you want to find the most competitive rate out there and don’t want to spend hours in the dealership’s finance office, getting preapproved before you hit the car lot is the way to go. And with more lenders than ever offering a quick online prequalification process, it’s easier than ever to find the best rate available to you.

Here are five reasons to get financing before hitting the dealership:

1. Get an idea of the interest rate you can qualify for

It’s no secret that dealerships mark up their rates to turn a profit on your loan. Even a seemingly small markup of a percentage point or two can add hundreds of dollars to your loan. When you apply for preapproval before visiting the dealership, you’ll have a good idea of the rate you can expect to receive. This makes it easy to avoid dealership markup and know when you’re being offered a good deal.

2. You can pick a car loan that fits your budget

Preapproval means you know the exact amount you can borrow, the term of your loan and the rate you can expect. You can use it to calculate your car loan’s monthly payment. Just be sure to reserve at least 10% of your preapproved car loan amount for taxes and fees.

Once you know your monthly payment, you can ensure it fits your budget — without the stressful guesswork the dealership’s finance office would put you through.

And if your loan doesn’t fit your budget? You can always borrow less than the maximum for a less expensive car that won’t break the bank.

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3. Lock in a good price and avoid upselling

With preapproval, you’re considered a cash buyer. You’ll be in a better position to negotiate the cost of your vehicle, largely because you don’t need to worry about how you’ll finance it.

Instead of talking monthly payments, you can talk total cost. Tell the salesperson that you only have a certain amount of money to spend. Any car they show you will need to be under that amount, or you walk away. You won’t need to worry about the salesperson potentially “packing” your payment with unrelated charges and fees.

And of course, you can avoid last-minute add-ons that raise the cost of your loan. An extended warranty or an add-on like GAP insurance are common ways for a dealership to make a quick buck — especially because you’re unlikely to ever use what you pay for.

4. Negotiate a better rate from the dealership

If you have good credit, you may still want to fill out a loan application at the dealership. This gives you a chance to see if the finance office at the dealership is willing to beat the rate you got preapproved for. A few percentage points lower, or special discounts available through manufacturer financing, may be worth the switch.

5. You’ll come across as an informed buyer

Preapproval sets you apart from an inexperienced buyer. It proves to the salesperson that you’ve done the legwork and are prepared for a big purchase. You’ll look like someone who knows what type of deal they can get — largely because you do. Combined with a firm stance on the money you can spend, you’ll be less susceptible to sales tactics meant to trick buyers into bad deals.

How to get preapproved for a car loan

To get preapproved for a car loan, simply visit the websites of the lenders you’re interested in and fill out their prequalification forms. We’ve curated a list of car loan providers that offer preapproval in the table below, so you can easily compare your options. You can also call or apply in person with some lenders if you need more guidance during the process.

It’s best to fill out prequalification forms with two or three lenders so you can compare rates. And remember: Preapproval offers may be good for up to 45 days, but you can avoid multiple hits to your credit score by submitting your applications within a certain window of time, like within 45 days of each other.

Compare lenders that offer pre-approved car loans

Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
Loans Canada Car Loans
$500 - $35,000
0% - 29.99%
3 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Compare rates from multiple lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
goPeer Car Loan
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
600
Min. income of $40,000 /year
P2P platform with competitive rates.
Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
AutoLoanProviders
$7,500 - $85,000
3.99% - 29.99%
12 - 96 months
300
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
300
Min. income of $1,800 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
Coast Capital Car Loan
$10,000 - No Max.
Varies
18 - 84 months
650
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
300
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
LoanConnect Car Loans
$500 - $50,000
9.90% - 46.96%
3 - 120 months
550
No min. income requirement
Pre-approval in as little as 60 seconds.
Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
300
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
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Can you be denied a car loan after preapproval?

No, you typically can’t be denied a car loan after you’ve been preapproved. If you are preapproved for a car loan that means the lender has done a hard credit check and is willing to lend you the money for a vehicle. All that remains to get your funds released is to choose a vehicle and sign the loan documents. Keep in mind that your preapproval may expire after 30-45 days, so if you haven’t signed the loan documents by then, you may be denied and have to reapply for preapproval.

Bottom line

Getting preapproved before you hit the dealership can help you find a better rate, avoid common sales tactics and get a better deal on the overall cost of your car.

Ready to get started? Compare your car loan options to find the best preapproval offers out there.

Frequently asked questions on getting preapproved for car loans

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