Getting Preapproved for a Car Loan: Why It Matters
A preapproved car loan could be your road to better rates with less dealership headache
| Lender | Best for | Starting APR | Term | Amount |
|---|---|---|---|---|
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Cheap rates and no model year restrictions | 3.50% | 12 to 84 months | Up to $100k |
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Those with military connections | 3.89% | 12 to 96 months | Starting at $250 |
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Preapproved car loans for fair credit | 4.49% | 12 to 84 months | Starting at $250 |
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Easy car shopping and transparent pricing | 5.21% | 24 to 84 months | Starting at $4k |
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Locking in rates | 5.34% (with autopay) | 12 to 72 months | Starting at $7.5k |
| Lender |
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|---|---|---|---|---|---|
| Best for | Cheap rates and no model year restrictions | Those with military connections | Preapproved car loans for fair credit | Easy car shopping and transparent pricing | Locking in rates |
| Starting APR | 3.50% | 3.89% | 4.49% | 5.21% | 5.34% (with autopay) |
| Term | 12 to 84 months | 12 to 96 months | 12 to 84 months | 24 to 84 months | 12 to 72 months |
| Amount | Up to $100k | Starting at $250 | Starting at $250 | Starting at $4k | Starting at $7.5k |
Best lenders for preapproved car loans
CHEAP RATES AND FEW RESTRICTIONS – SOUTHEAST FINANCIAL CREDIT UNION
- One of the lowest starting rates on the market
- No restrictions on model year (some lenders won’t approve cars more than 10 years old)
- Lets you skip up to two monthly payments a year
- Can qualify with a credit score as low as 600
- Must become a credit union member (but it’s easy to join)
- Lowest rates require you to pay off your loan off in 12 months months
- Skipping a payment costs a $60 fee
Auto loan lenders usually have rules about the cars they will finance. Vehicle age is typically one of them, and many won’t take cars that are older than 10 years. Southeast Financial Credit Union has no restrictions on model year or odometer readings.
SFCU also offers super-cheap rates, but there’s a catch — its lowest rates only apply if you can pay off your loan in just 12 months months. Short-term car loans are great for saving interest, but monthly payments tend to be high since you have less time to pay off your car. SFCU offers repayment terms from 12 months to 84 months months.
You have to become a member of SFCU before you can get a preapproved car loan. Luckily, you can apply for your loan and become a member online, in one step.
Read our full Southeast Financial Credit Union auto loan review.
You must have a credit score of at least 600 to qualify for an auto loan. You also need to join the credit union before you can borrow.
All SFCU members must open a savings account with a deposit of at least $5. To become a member, you must meet one of the requirements below:
- Make a $5 donation to Autism Tennessee
- Be a current employee or retiree of a Southeast Financial Select Employee Group
- Be related to a current SFCU member
- Live, work, worship or go to school in certain parts of Tennessee, Kentucky or Mississippi
THOSE WITH MILITARY CONNECTIONS – NAVY FEDERAL CREDIT UNION
- 0.25% rate discount if you’re active duty or retired military
- Preapproval is good for 90 days (30 days is standard)
- Can have up to 96 months months to pay off your car
- Customer service is available 24/7 by phone
- Must have a tie to the military to qualify for membership
- Can only get preapproved if you’re buying from a dealership, not a private party
Navy Federal Credit Union (NFCU) only serves people with military connections, so it offers military-specific benefits that other lenders don’t.
For instance, active and retired military members may qualify for a 0.25% annual percentage rate (APR) discount. And if you decide to bank there, you can get your military pay a day early with direct deposit.
Not everyone can join NFCU because of its strict membership requirements. You also can’t get preapproved if you’re buying a car from a person, not a dealership. NFCU’s repayment terms range from 12 months to 96 months months.
Read our full Navy Federal Credit Union auto loan review.
Navy Federal Credit Union (NFCU) doesn’t specify its minimum credit score requirements. To become a member, though, you’ll need to fall into one of the following criteria:
- Active duty members of the military (regardless of branch)
- Veterans, retirees and annuitants
- Those in the Delayed Entry Program (DEP)
- Department of Defense (DoD) Officer Candidates and ROTC
- DoD Reservists
- DoD civilian personnel
- Immediate family of military members, as well as household members
PREAPPROVED CAR LOANS FOR FAIR CREDIT – CONSUMERS CREDIT UNION
- Accepts credit as low as 620
- Can skip a payment twice a year without a penalty
- 0.50% rate discount if you buy through its car-buying service
- Sends the money directly to the dealer or seller
- Have to join the credit union (but membership is open to everyone)
It can be hard to get auto loan preapproval when you have fair credit (or a FICO Score between 580 and 669). With Consumers Credit Union (CCU), you could qualify as long as your score is 620+.
CCU also lets eligible borrowers skip up to two payments a year. Interest will still accrue, but you won’t have to pay an extra fee to skip (like you do with SFCU).
Like with any credit union auto loan, you have to join before you can borrow. Membership is open to everyone. If you choose CCU to finance your car, you can choose between loan terms of 12 months to 84 months months.
Read our full Consumers Credit Union auto loan review.
To get an auto loan with CCU, you must meet the requirements below:
- Minimum credit score: 620
- Administrative: Pay a $5 fee (which CCU usually reimburses, but not on auto refinance loans); open a Member Share/Savings account
EASY CAR SHOPPING AND TRANSPARENT PRICING – CAPITAL ONE
- Auto Navigator tool shows personalized rates and monthly payments as you shop
- Compare car prices with multiple dealers in your area
- Can still qualify if you have bad credit
- Offers preapprovals, but by invitation only
- Auto Navigator uses prequalification, so higher chance of rate changing at dealer
- Can only use at partner dealerships
Capital One does preapprovals, but by invitation only. But you can prequalify through its car-shopping tool, Auto Navigator. Auto Navigator lets you compare cars for sale on Capital One’s network, including personalized monthly payments based on a soft credit hit.
Since Auto Navigator uses prequalification and not preapproval, the rates it shows you are a little less concrete. Still, it’s a great launching point when creating your car-buying budget. Capital One offers repayment terms ranging from 24 months to 84 months months.
Read our full Capital One auto loan review.
You could be eligible for a car loan through Capital One as long as you have a credit score of at least 500. You can prequalify on Capital One’s website to get an idea of where you stand.
Capital One also has vehicle eligibility requirements. To be eligible for financing, the car must:
- Be a model year 10 years or newer
- Have fewer than 120,000
- Be purchased at a participating dealership
Some older models may still be eligible as long as they have fewer than 150,000 miles on the odometer, but you will need to speak with your dealer or Capital One for more information.
LOCKING IN RATES – PNC BANK
- Rates are locked in, so no surprises later
- Overnights the preapproved car loan to your house
- Brick-and-mortar branches if you prefer to do things in person
- Auto loans come with a hardship program in case you can’t pay
- Only available in 27 states and the District of Columbia.
- Must buy from a partner dealer
- Car must be a 2017 model or newer
- Offers an autopay discount, but only if you use a PNC checking account
PNC Bank’s preapproved car loan works a little differently. It’s called a Check Ready loan and instead of getting preapproved, you’ll be getting your auto loan in advance. There will be no additional underwriting or applications at the dealer, so what you see is what you get.
Unfortunately, PNC is only available in 27 states, plus the District of Columbia (see eligibility requirements below). You can also only use your preapproved loan with eligible dealerships (no private parties) and will need to choose between repayment terms ranging from 12 months to 72 months months.
Read our full PNC Bank auto loan review.
To get a car loan from PNC, you have to meet the following criteria:
- Residency: Currently, PNC has branches in 27 states and the District of Washington.
- Car requirements: Model years 2017 through 2026 and maximum of 80,000 to 100,000 miles
- Membership: You don’t need to be a PNC customer to get a loan.
What is a preapproved car loan, and how do I use one to buy a car?
Preapproved car loans aren’t a guarantee, but they’re as close to an auto loan as you can get without signing a contract. Preapproval shows how much you’re eligible to borrow based on a hard credit pull. Rates and terms are based on your actual credit history. It’s possible that your rate will change when you formally apply, but it’s unlikely.
In most cases, you’ll fill out an online application. You might also need to upload paperwork like a W-2.
If preapproved, you’ll get a certificate to take to the dealership (or the seller, for private-party auto loans). In some cases, the lender will send it directly to the dealer instead of you. Once you’re preapproved, you can head to the lot, finalize your finance application and buy your car.
How a preapproved car loan can save you money
A preapproved car loan can save you time at the dealership — you’re doing most of the legwork at home. But getting preapproved is also a great way to save money. Here’s how.
Dealer might try to beat your rate
Dealerships make money by setting you up with financing. Typically, they have a lender network to tap. They might also have access to 0% APR deals through your car’s manufacturer.
Tell the dealer what rate you’re preapproved for (but keep the amount a secret) and ask them if they can do better. If so, that means more profit for them and a cheaper car loan for you.
Can help you avoid inflated dealer rates
Dealerships can also make money by marking up your interest rate.
Let’s say the dealer sets you up with financing that has an 8% interest rate. However, the lender actually offered 6%, but you didn’t know it. This 2% difference is called dealer reserve, and it lets the dealership earn a percentage of the interest you pay.
Preapproval makes you a more educated buyer, and educated buyers are more likely to walk out on the right side of the deal.
You act like a cash buyer and avoid upsells
Cash buyers tend to prioritize total car cost over monthly payments. With a preapproved car loan, you can too. Focusing on total cost is a smart money-saving strategy.
For one, dealers will find it harder to roll add-ons (like cleaning packages) into your loan by pitching low monthly costs. Everything rolled into your loan, from dealer fees to add-ons, accrues interest.
It’s also possible to make a car seem cheaper than what it is by offering low monthly payments on a long car loan. Although you’ll have more time to spread your payments across, you’ll pay more overall interest. Focusing on total cost helps you avoid this.
Use our auto loan calculator to see how loan terms impact total costs, even if the car’s price remains the same.
Preapproved car loans vs. prequalification
It can be easy to confuse prequalification and preapproval, but they aren’t the same thing.
Think of prequalification like a quote based on your word and a soft credit pull. Preapproval doesn’t guarantee that you’ll get the loan, but you probably will. It considers your credit score, credit report, income — typically everything a lender looks at on a formal application.
Not all car loan lenders offer preapproval. Some only offer prequalification, while others require prequalification as the first step toward preapproval.
| Preapproval | Prequalification | |
|---|---|---|
| Best for… | Negotiating with the dealer | Getting a quote on a car loan |
| Accuracy of estimate | Highly accurate | Rough estimate |
| Does it impact credit score? | Yes (hard credit pull) | No (soft credit pull) |
| Required documentation | Could require proof of residency, proof of income, etc. | None |
4 easy steps to auto loan preapproval
You can use a lease buyout loan to buy the car you’re leasing at the end of your lease term instead of returning it. Your lease contract will tell you if you’re allowed to buy out your car at the end of your lease.
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Set your budget
Use our car affordability calculator to see what price range to stick to. The lender won’t preapprove you if you ask for more money than you can pay back. -
Shop for a car
Research what car you should buy and start shopping. You usually don’t need a VIN to get preapproved. Still, you should have an idea of what you want so you know how much to ask for. Also, remember that some lenders only offer preapproval if you shop with a dealer in their network. -
Apply for preapproval
Applying for preapproval is a lot like applying for a loan. You’ll fill out an application, and you might need to send in W-2s, pay stubs and your driver’s license. -
Get more than one offer
Get a handful of preapproved car loans and compare APRs, loan terms and fees. Always compare offers apples to apples to get a true picture of which offer is cheapest.
When you’re shopping for a car, don’t forget to shop for insurance. I’ve been an agent for 15 years, and one of the biggest mistakes I see car buyers make is forgetting to budget for new car insurance premiums. It’s a myth that new cars make your premium go down. Yes, newer cars are safer but they cost more to repair or replace.
How LendingTree works
You wouldn’t let your dealer pick out your car, so why let them pick out your loan? Take the wheel and tap into our expert-approved network of lenders. You could save an average of average of $2,346 on your auto loan when you get banks to compete for your business with LendingTree.
1. Tell us what you need
Answer basic questions about who you are and how much money you need. We’ll take care of the rest. It’s free, simple and secure.
2. Shop your offers
We’ll send you offers from up to five trusted lenders. Compare your offers side by side to see which one will save you the most money.
3. Get your money
Choose a lender, sign your loan paperwork and take off in your new ride.
Ways to get preapproved for a car loan if you have bad credit
Getting preapproved for a bad credit car loan can be a challenge. Here’s how you can make it easier.
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Offer a bigger down payment
The 20/4/10 car-buying rule says you should put down at least 20% on a new car (10% for used). Offering more means you get to borrow less, and it’s easier to qualify for smaller car loans. -
Buy a cheaper car
Getting a cheaper, used car can also mean a smaller loan and easier preapproval. -
Choose a shorter loan term
The quicker you can pay off your loan, the less chance you have to fall behind on payments. Shorter car loans are less risky for the lender, so they might be more willing to offer you one. -
Get a cosigner
Getting someone with better credit than you to cosign on your auto loan can help you get approved. Beware, though. Late payments will affect their credit as much as yours. -
Improve your credit
On average, you could save $2,316 on your auto loan by raising your credit score from fair (580-669) to very good (740-799), according to a LendingTree study. Improving your credit score doesn’t happen overnight, but it’s something you should always be working toward.
LendingTree Spring
Supercharge your score
Get free, personalized recommendations on how to improve each of the factors that affect your credit score with LendingTree Spring. We’ll show you how your credit stacks up and what to do to boost your score.
Frequently asked questions
Yes, your credit score will probably go down a little after preapproval because they require a hard credit hit. Most people see a drop of less than five points. To minimize damage, get all your preapprovals done within 14 days. If you do, only one hard credit hit will count against you thanks to FICO’s rate shopping window.
No, preapproved doesn’t mean you get the loan. It means that you have a good chance of getting the loan, but nothing is guaranteed until you formally apply.
No, you don’t always need a down payment for a preapproved car loan. If the lender doesn’t require a down payment to buy a car, it won’t require one for preapproval.
Skipping your down payment might seem like a good idea now, but it usually means higher rates, harder approvals and maybe even an upside-down car loan.
Our methodology
In order to identify the top five lenders, we used the following criteria to systematically rate and review lenders that offer auto loan preapproval to consumers nationwide:
Accessibility. Lenders that offer loans to borrowers in a variety of different credit bands (including fair and bad credit) and to nontraditional borrowers were awarded points. We also favored lenders that are transparent about their credit scoring criteria, that offer online applications and that don’t restrict loans based on car model year.
Rates and terms. We gave points to lenders with low starting interest rates, rate discounts and lots of term options.
Repayment experience. For starters, we consider each lender’s reputation and business practices. We also favor lenders that have self-service payment options (like a mobile app), provide reliable customer service and offer unique perks.
According to our systematic and unbiased rating and review process, the best preapproved car loans come from Southeast Financial Credit Union (SFCU), Navy Federal Credit Union (NFCU), Consumers Credit Union (CCU), PNC Bank and Capital One.
LendingTree reviews and fact-checks our top lender picks on a monthly basis. LendingTree partners with dozens of auto lenders, but partners and non-partners receive equal treatment in our scoring and review process.