Up your bargaining power before heading to the dealership.
Our top pick: car.Loan.com Car Loans
- Easy online application
- Fast response time
- Bad credit, no credit OK
Our top pick: car.Loan.com Car Loans
- Min. Credit Score Required: 300
- Requirements: Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
6 providers that offer preapproval on car loans
| Lender | How long preapproval lasts | APR | Terms | Eligibility | |
|---|---|---|---|---|---|
| myAutoloan.com | Varies by lender | 2.49% | 2 years to 7 years | Must have a Social Security number; make $24,000+/year; have no open bankruptcies. | |
| LendingTree | Varies by lender | 2.29% | 1 year to 7 years | 18+ years old, good to excellent credit, US citizen | |
| Navy Federal Credit Union | 60 days | 2.99% | 8 years | Credit union member, US citizen or permanent resident, have age of majority. | Read review |
| Bank of America | 30 days | 3.54% | 1 year to 6.25 years | Ages 18+, US citizen or permanent resident, buying eligible vehicle | Read review |
| Capital One | 30 days | 3.24% | 3 years to 6 years | Valid street address, existing Capital One account in good standing, buying 2009 model or newer with less than 120,000 miles | Read review |
| USAA | 45 days | 2.89% | 7 years to 1 year | USAA member, US citizen or permanent resident, ages 18+ | Read review |
| CarFinance.com | 30 days | 4.99% | 6 years | Age 18 years or older, credit score 500+, to refinance loan car must have less than 100,000 miles, no more than eight years old and loan balance must be $7,500+ | Read review |
Find a car loan that’s right for you
5 tips to get preapproved on a car loan
Here’s a few things to keep in mind before you buy your new wheels:
- Research your car. The make. The model. The year. The color. Also take gas efficiency costs into consideration.
- Check your financial standing. Car loans are an extensive financial commitment. Be sure that a loan is something you can realistically fit in your budget.
- Test drive your car. Taking the car for a test drive helps you determine if there are any issues.
- Take the car to a mechanic. Even if it costs a little extra, having a mechanic eyeball for any problems under the hood could save you a boatload of money down the line.
- Shop around. Your next car may be at several dealers — it could be a good idea to not to buy the first car you see.
Why get preapproved for a car loan?
- Confidence in your financial situation. The lender assessed your finances and gave you the green light to purchase a vehicle, so you don’t have to stress about securing financing.
- Bargaining power. Knowing how much you can spend gives you the upper hand when negotiating a price at the car dealership.
- Fixed interest. A fixed interest rate can help you maintain a budget without having to worry about fluctuations in the market raising your interest rate.
Why might I want to hold off?
- Short approval time. Auto loan preapproval is often only available for between 30 and 60 days.
- Limited budget. Because you’ve been preapproved for a set amount, your car options may be limited.
- Smaller market. Not all lenders offer preapproval compared to standard car loans.
- Secured loan. Your loan option may be based on the condition that the car be used as collateral if your credit is poor. In this case, the car will be repossessed if you can’t make payments.
Should I get preapproved for a car loan?
It depends on your situation. You might want to get preapproved for one of the following reasons.
- You’re new to lending. Getting preapproved can give you an idea of what type of loan you can actually get without the commitment.
- You want to negotiate. Going to a lender with a preapproved rate in hand is key to making a solid case for yourself.
- You aren’t set on a dealership. Having a preapproved car loan effectively makes you a cash buyer. If you don’t like one dealer is offering, you can move on to the next.
How does preapproval affect car loan interest rates?
Preapproval affects car loan interest rates in two ways: It allows you to learn what rate you can qualify for annd use that as a bargaining tool to negotiate a lower rate with a lender.
For example, say you were preapproved for 11% APR. You can walk into a dealership and offer the salesperson 8%. They might come back with 9% or 10%.
Preapproval isn’t a commitment, so if the dealership can give you a lower rate, take it. If you can’t get a better deal, you can walk away or find another dealership that can — or stick with the original loan.
Preapproval vs. prequalifying
When it comes to car loans, preapproval is technically not the same as prequalifying — though some lenders might use the two term to refer to the same process.
- Tip: If a lender advertises “locked in rates,” they’re talking about preapproval, not prequalifying.
How to get preapproved for a car loan in 5 steps
You can apply for an auto loan online, in person or over the phone, depending on your lender.
- Get a copy of your credit score.
- Ensure you have all your personal documents and income information.
- Compare a range of loans that you can apply for.
- Contact your bank or lender you wish to apply with.
- Shop around for your next car.
How preapproval works on auto loans
With car loans, preapproval works by allowing you to lock in the rates and terms on a car loan before heading to the dealership. It draws out period between getting approved for a car loan and signing the loan documents.
Unlike preapproval on other types of loans, auto loan preapproval typically requires a full application, documents and a a hard credit check.
What happens after I get preapproved?
After you get preapproved for a car loan, most lenders allow you to shop around for around 30 days to find the right car. Some might offer preapproval for as long as 60 days.
Once preapproved, lenders typically give you a check that you can use to buy a car at a dealership or with a private party. You aren’t obligated to sign off on the loan if you decide to go with another lender or not make the purchase at all.
More features to consider
You can get some of the best features and interest rates on the market with preapproved car loans.
- Choice of fixed or variable interest rates. Keep your repayments the same each months or take advantage of the flexibility of a variable rate loan.
- Up to seven-year loan terms. Longer loan terms can help make the regular payments more affordable. Fixed rate loans may only come with maximum loan terms of up to five years. Keep in mind that longer terms lead to more interest paid over time.
- Weekly, twice a week and monthly payment options. This differs among lenders, but you’ll usually have the choice of when you want to make your loan payments.
- Extra payments. Some preapproved car loans allow borrowers to make additional repayments without penalty.
Bottom line
Getting preapproved for a car loan can be helpful for buyers who want to negotiate with a dealer or are willing to shop around for a car. But since not all lenders offer preapproval on their car loans, it could limit your options. Check out our guide to car loans to find out more about how auto financing works.