Where to Get a Preapproved Car Loan and Why It Matters

Getting preapproved before heading to the dealership gives you more negotiating power.

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Where to get a preapproved auto loan

National and local banks, credit unions and online lenders offer car loan preapprovals. Here are some national auto lenders with some of the lowest rates:

Starting APR*TermsLoan AmountsMin. Credit ScoreBest For...
1.00%Up to 84 monthsFrom $12,000550Large car loans
3.29%Up to 96 months$250 - $500,000No minimumMilitary connections
3.49%Up to 84 monthsUp to $150,000UnspecifiedUsed car buyers
4.34%12 - 72 monthsFrom $7,500UnspecifiedThose who prefer a bank
4.44%36 - 84 months$500 - $100,000620A car-buying service

*May include an autopay discount

Why get a preapproved auto loan

It helps you plan your money moves

Budgeting before you hit the blacktop is a great plan, and getting a preapproval can help you eliminate the guesswork by providing estimates on monthly payments. Don’t forget: When you’re looking at car prices, leave at least a 10% buffer to account for taxes and fees. Use a car affordability calculator to help you plan your purchase.

You can defend yourself against dealer markups

Dealers can inflate the interest rate they offer in order to make a profit when you get a car loan through them. With a preapproved car loan, you’ll have an interest rate quote directly from a lender without a middleman marking it up.

You get to act like a “cash buyer” and avoid upsells

Cash buyers often look at total cost rather than monthly payments, giving them the upper hand when negotiating. Similarly, when you have a preapproved auto loan with a set price, it’s much easier to deflect a sales pitch that could increase your monthly rate.

How to get a preapproved auto loan

Plenty of financial institutions offer car loan preapprovals, but some of the most common are:

  • Credit unions: Your local credit union could be a great first place to check. Credit unions tend to offer lower auto loan rates than banks and many have lenient membership requirements, such as a one-time, nominal donation to a nonprofit.
  • Banks: National banks offer convenience, providing additional services like credit cards, saving and checking accounts in addition to auto loans. Keeping all of your financial transactions with one entity makes it easy to stay organized, and may even qualify you for bundles and discounts.
  • Online lenders: Without the overhead that credit unions and banks face, online lenders can offer competitive rates. If you’re comfortable completing the car loan process entirely online, an auto loan preapproval from an online lender could be the best choice. You could fill out an online form at LendingTree and get up to five auto loan offers at once.

It doesn’t harm your credit score to apply to multiple lenders any more than it does to apply to one. As long as you do all your applications within a 14-day window of time, the three major U.S. credit bureaus count multiple inquiries for the same type of loan as one hard pull against your credit.

What will I need to get an auto loan preapproval?

Application requirements for car loan preapproval are often the same or looser than a regular car loan application.

  • Loan information: How much you want to borrow and the loan term
  • Personal information: Name, contact details, date of birth, Social Security number
  • Residence information: Address, length of residency, whether you rent or own, rent or mortgage payment
  • Income information: Gross annual income, employer name and contact details

The lender may ask about the car you want to purchase. You could always change the vehicle by contacting the lender if you change your mind after test driving.

What's the difference between a car loan preapproval and prequalification?

An auto loan preapproval is a firm offer from a lender. When you finalize the loan, your actual APR will be very similar, if not the same, as your preapproval rate. On the other hand, a prequalification is not an official offer, but an estimate of the car loan you may receive. Because a prequalification is not firm, it’s much harder to use it when negotiating at a dealership.

PreapprovalPrequalification
  • A firm offer from a lender
  • The lender does a hard credit pull
  • APR is not likely to change
  • It offers a firm negotiating position
  • An estimate of the loan offer you may receive
  • The lender does a soft credit pull
  • APR is likely to change