How preapproved car loans work for new and used vehicles |

How car loan preapproval works

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Preapproval helps you know exactly how much bargaining power you have when searching for a vehicle.

When you’re ready to buy a car, you want to know you’re getting the best deal. One sure way to save money on your car loan is by getting the best interest rate. Walking into a dealership with a preapproved loan not only helps you decide your budget, but it gives you bargaining power to get the best rate.

Preapproval is offered through some lenders. Find out more about preapproval and compare your options. Car Loans

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Get matched with a local car dealership to finance your car purchase. Bad credit, no credit OK.

  • Specializing in 'buy here, pay here' car loans. No banks or credit unions.
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  • Free loan-matching service. No obligation offers.

    The ins and outs of preapproved car loans

    Find lenders online, in person or over the phone who will evaluate your financial situation to determine how much you can borrow. You’ll provide information like your monthly income and your debt, and the lender checks your credit. Lenders usually do a soft pull on your credit for preapprovals — so it won’t affect your credit. If you’re preapproved, it’s only good for a short time.

    Why would I want preapproval for a car loan?

    If you walk into a dealership with a preapproved car loan, you’re prepared to get the best deal and can negotiate list price and interest rate with confidence. If your preapproval was for 11% interest rate, offer the salesperson 8%. If they come back with 9%, you got yourself better deal. A 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.

    What is conditional approval for a car loan?

    Conditional approval is given before preapproval on your car loan. Based on the information you give the lender, you’re given a maximum loan amount. You’ll have to wait to get information like loan term and interest rates. Unconditional approval is when the lender approves you for the loan to buy a specific car.

    Find a car loan that’s right for you

    Rates last updated September 25th, 2018

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Minimum Credit Score Term of Loan Requirements Car Loans
    Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
    Varies by lender
    Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
    Auto Credit Express Car Loans
    Get connected with an auto lender near you, even if you have bad credit.
    Typically 3 to 6 years
    Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
    LendingClub Auto Refinancing
    Lower your monthly car payments and save on interest through a fast and easy online application process.
    Fair or poor credit
    Minimum of 2 years
    Car must be less than 10 years old with fewer than 120,000 miles. Current loan must have a balance between $5,000 and $55,000 and at least 24 months left in its term.
    MotoRefi Car Loan Refinancing
    A car loan connection service for borrowers looking to refinance.
    1–6 years
    Must have an income of at least $2,000/month and have a vehicle with less than 100,000 miles. Car Loans
    Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.
    24 to 84 months
    Must have a Social Security number; make $24,000+/year; have no open bankruptcies.
    LendingTree Auto Loans
    Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
    Typically 1 to 7 years
    Must be a US citizen and 18+ years old. Must have good to excellent credit.
    Capital One Auto Financing
    You could qualify for a car loan of up to 40000, but not all dealers accept this bank's financing.
    Good to excellent credit
    36 to 72 months
    Valid street address; existing Capital One accounts in good standing. Car must be a 2006 model or newer with less than 120,000 miles.
    Wells Fargo Auto Loans
    Auto loans with high loan amounts to cover your car purchase or refinancing needs.
    Good to excellent credit
    1 to 6 years
    Your income and assets must support your existing debt obligations and the desired loan amount.

    Compare up to 4 providers

    How to get preapproved for a car loan

    You can apply for an auto loan online, in person or over the phone.

    1. Get a copy of your credit score.
    2. Ensure you have all your personal documents and income information.
    3. Compare a range of loans that you can apply for.
    4. Contact your bank or lender you wish to apply with.
    5. Shop around for your next car.

    Features of car loans

    Pros and cons of a preapproved 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.
    • Receive a lower interest rate. If the preapproved loan came with an interest rate, you can haggle with the dealership to see if they can offer you a more competitive in-house financing deal — let them make the first offer.
    • 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.


    • Short approval time. Approval on most preapproved loans is only available for a short time.
    • Limited budget. Because you’ve been preapproved for a set amount, your car options may be limited.
    • Smaller market. There aren’t as many lenders that 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.

    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.

    Quick checklist before accepting a loan offer

    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.

    Bottom line

    When you’re searching for a car loan, keep in mind that not all loans offer preapproval. It’s important to know what’s available before you start comparing.

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