Finder makes money from featured partners, but editorial opinions are our own. Advertiser Disclosure

5 reasons to get financing before visiting the dealership

Looking for the best 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 your potential interest rate

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, 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. Pick a 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 about 10% 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.

3. Simplify the negotiation process

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

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, or you walk away. You won’t to worry about the salesperson potentially “packing” your payment with unrelated charges and fees.

And of course, you can avoid last-minute additions that raise the cost of your loan. An extended warranty or 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. Score 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. Look like 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. 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 14-day window.

Compare more car loans

1 - 3 of 3
Name Product Filter Values Minimum credit score APR Loan term Requirements
No minimum credit score
3.9% to 27.9%
1 to 6 years
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates.
Monevo Auto Loans
3.99% to 35.99%
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit. Car Loans
Starting at 2.15%
550+ credit score, no open bankruptcies, $24,000+ annual income, US citizen or permanent resident, 18+ years old
Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.

Compare up to 4 providers

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

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site