How To Get Pre-Approved For A Car Loan


Buying a car is a significant purchase, only behind buying a home. Most people finance a car and make monthly loan payments, but what if there were a way to secure lower payments? When you get pre-approved for a car loan, you can approach a lender or dealership with more leverage.

A pre-approval can demonstrate your commitment to purchasing a car and can help you secure a lower interest rate. This step also makes you clear on the type of financing you can and cannot get. Understanding how pre-approvals work and what the process looks like can help you save money on your auto loan. Here’s what you need to know for how to get pre-approved for a car loan.

What does it mean to be pre-approved for a car loan?

Getting pre-approved lets you and the lender know how much you can get from an auto loan. During the pre-approval process, the lender looks at your financial information to calculate how much money you would get approved for when you submit an application. Borrowers also receive an estimated interest rate during the pre-approval process. If the dealership wants you to pay an unfair interest rate, you can use the pre-approval to negotiate a lower interest rate. 

Pre-approval does not guarantee that you get a loan, and you don’t get to purchase a car with a pre-approval. But it clearly lays out how much you would likely get from a lender or dealership and reduces hiccups within the loan application process.

Benefits of getting pre-approved for a car loan

Getting a pre-approved auto loan presents buyers with several advantages:

  • Access to lower interest rates
  • Knowing how much you can borrow instead of asking for too much
  • Adjusting your car search based on the pre-approval terms
  • Faster loan application process
  • More clarity goes into the deal

You get all of these advantages from a process that only takes 30 minutes. You will then hear back from the lender within seven to 10 days, but some lenders provide a decision even quicker.

Where to get pre-approved for a car loan

You can get pre-approved for a car loan at a traditional bank, credit union, or online lender. Consumers have many choices when it comes to seeking preapproval for a car loan.

7 steps to get pre-approved for a car loan

A pre-approval can help you save hundreds or even thousands of dollars by helping you negotiate a lower interest rate with your dealership. That’s just one of several benefits of pre-approvals, and you can get your pre-approval by following these steps.

Review your credit score and report

A lender will look at your credit report during the pre-approval process. This report will impact your interest rate and how much money you can borrow for a car loan. It’s a good idea to look at this report to understand what creditors will see. It can provide inspiration to strengthen your payment history and work on other areas to improve your credit score, but you may also find errors. Reaching out to a credit bureau to correct any errors can give you a few extra points on your credit score. Every added point can make a big difference for pre-approval terms.

The three major credit bureaus each let you obtain a free copy of your credit report annually. Instead of asking for a free copy from all three credit bureaus, you should space your requests to once every four months. You don’t want to burn through all three of your free passes in one day.

Gather required documents

Any lender will ask for necessary documents that prove your identity, details about the vehicle, and other essentials. Each lender has different requirements, but these are some of the common requests:

  • Proof of identity
  • Vehicle insurance
  • Vehicle information
  • Proof of income and residence
  • How you will make the down payment
  • Credit and banking history

If you are trading in a vehicle, you will also have to present that vehicle’s registration. 

Settle on a price range

Looking for a new car can get complicated. You may not know which model you want or how many features to add to your car. While you can sort these details out before your purchase, you should establish a price range for your vehicle. This range can guide your pre-approval application, so you know how much capital to ask for during this process.

Consider your financing options

Banks, credit unions, online lenders, and car dealerships can provide financing for car loans. You can shop around to see what kind of rates you will get, and it’s also a good idea to look at credit score requirements from each loan provider.

Submit your application for pre-approval

After assembling the documents and filling out your details, it’s time to submit your application. The length of this process depends on the lender, but you will hear from most loan providers within seven to 10 days.

Review the terms and conditions of your offer carefully

You will eventually receive a message containing details about your loan offer. Setting expectations before getting a loan can help you understand whether you have a fair offer. You should look at the maximum capital and the corresponding interest rate. Those monthly payments will stay with you for multiple years. Take as much time as you need to consider the loan offer and determine whether you are happy using those terms to buy a car.

Shop for your car

Now that you have pre-approval, you can shop for your car with more confidence. You can look for cars before getting pre-approved for a loan, but getting pre-approval gives you a reason to intensify your search. That’s because the pre-approval offer will expire in 60 to 90 days, depending on your lender. You have to strike while the iron is hot to get more leverage in the negotiation process and have more clarity about how much you can afford to borrow.

Get One Step Closer To Your First Or Next Car

Pre-approval is a significant step on the path to getting your first or next car. This process reveals the loan offer you can receive and gives you negotiating power with a dealership that wants to overcharge. Pre-approval is a step in the right direction as you search for a car.


How much do I need to make a month to qualify for a car loan?

Lenders look at your debt-to-income ratio (DTI), credit score, and other factors to determine whether you qualify for a car loan. The maximum DTI ratio is 50% for most lenders.

How long does it take to get pre-approved for a car loan?

It can take seven to 10 days to get preapproved for a car loan.

Can a preapproved car loan be denied?

A preapproved car loan can be denied. Your finances may have changed since you got your preapproval, and it’s not a guarantee. Preapproval significantly increases the likelihood of getting the loan.

Sign Up
Sign Up

How much would you like to borrow?

Compare rates and get personalized offers.

It’s fast, free and won’t affect your credit score.

Sign Up