How preapproved car loans work for new and used vehicles |

How car loan preapproval works

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Up your bargaining power before heading to the dealership.

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. However, it can limit how much you’re able to spend on your new car. Car Loans

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    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.

    Find a car loan that’s right for you

    Rates last updated January 19th, 2019

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    Answer two quick questions to filter the loan offers and get the best one for you.

    Select your credit score range

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    Finally, select where you live.

    To get your credit score:

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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 Min. 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.
    LightStream Auto Loans
    Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
    Good to excellent credit
    Flexible terms
    Good or excellent credit, enough income or assets to afford a new loan, US citizen or permanent resident, 18+ years old
    LendingClub Auto Refinancing
    Lower your monthly car payments and save on interest through a fast and easy online application process.
    Fair or better 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.
    RateGenius Auto Loan Refinance
    Connect with a network of over 150 lenders to refinance your car loan.
    Income of $2,000+/month, vehicle has less than 150,000 miles and is no older than 8 years, loan balance is between $10,000 and $100,000, debt-to-income ratio is less than 50%
    LendingTree Auto Loans
    Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
    Good to excellent credit
    Typically 1 to 7 years
    Must be a US citizen and 18+ years old. Must have good to excellent credit.

    Compare up to 4 providers

    How preapproval works on auto 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 auto loan preapproval?

    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% APR, 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.

    Preapproval vs. prequalifying

    When it comes to car loans, preapproval is not the same as prequalifying. Preapproval means that you’re ready to buy the car and essentially already have the money. It involves a hard credit check that temporarily lowers your credit score and gives you more power at the dealership.

    Prequalifying is useful if you just want to get an idea of which rates and terms you’re eligible for with a lender. It involves a soft credit pull that gives you a ballpark estimate of the loan you might get when you apply. It’s helpful when comparing lenders, but it won’t give you leverage for negotiating a price

    Should I get 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. Auto loan preapprova is often 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.

    5 tips to get preapproved on a car loan

    Here’s a few things to keep in mind before you buy your new wheels:

    1. Research your car. The make. The model. The year. The color. Also take gas efficiency costs into consideration.
    2. 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.
    3. Test drive your car. Taking the car for a test drive helps you determine if there are any issues.
    4. 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.
    5. 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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