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Auto financing: Prequalification vs. preapproval Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering you interactive financial calculators and tools that provide objective and original content, by enabling you to conduct your own research and compare data at no cost to help you make sound financial decisions. Bankrate has partnerships with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site come from companies that compensate us. This compensation may impact how and where products appear on this website, for example, for example, the order in which they be listed within the categories of listing in the event that they are not permitted by law for our mortgage home equity, mortgage and other home lending products. But this compensation does not influence the information we provide, or the reviews appear on this website. We do not contain the entire universe of businesses or financial offers that may be available to you.



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3 minutes read. Published November 02, 2022
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Mark Kantrowitz is an expert on student financial aid including the FAFSA as well as scholarships, 529 plans educational tax benefits, student loans.









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The prequalification process and the preapproval procedure are different methods to get an early read on your options when it comes to financing for your vehicle. Prequalification is not as rigorous and requires only basic information regarding your financial situation and gives you estimates of what rate and terms you may be eligible for. Preapproval requires you to share more of your financial and personal details with a lender since it's essentially an application that is only partial. Prequalification is different from preapproval A is that it's a formal invitation from a lender, with conditions, and provides an estimate of the is the car loan conditions you may be eligible for. Since a prequalification isn't an official offer, it's of no useful when you're negotiating with the dealership. It doesn't matter if you go with an auto loan prequalification or preapproval neither of these are guarantees -the final approval of your loan will be contingent on the underwriting department of the lender not finding any unexpected issues in your credit report and other factors, like employment and income verification. Benefits of auto loan preapproval and prequalification Both preapproval as well as prequalification let you get a good grasp on how much money you could borrowand the amount you'll pay to borrow it. Benefits of preapproval With preapproval, you can shop with confidence being confident that you'll likely get the same or a similar interest rate. It is also possible to make use of your preapproval rate a point of with the dealership once you enter the financing office, putting pressure on them to beat that rate. Benefits of prequalification an easy method to determine what kind of loan you could get particularly if you're not prepared to begin shopping with a serious. Credit scores aren't affected since the lender does not run a strict credit check. Things to consider when you apply for prequalification for auto loan prequalification and preapproval If you apply for a prequalification for an auto loan you will receive a rough estimate of what loan amount and rate you'll be offered. This information to shop around for the most competitive rate however, be aware that prequalification does not constitute the same as an offer that is officially made. Rates cannot be guaranteed and their legitimacy is contingent on how precise the information you give is. Preapprovals also aren't guaranteed. If your income, job or credit score drastically fluctuate between when you are preapproved and when you fully apply, you may be refused the loan. Keep this in mind while shopping and be cautious about spending, particularly when using credit cards. How do I obtain pre-approval for a car loan If you decide that a car loan is the right choice for you, then you'll be required to gather all the documents and submit an application for preapproval. It is suggested that you research several reputable lenders before applying. Once you've been preapproved, you will have a clear idea of what you can spend and be in control when it's time to negotiate. Preapproved auto loans generally last for between 30 and 60 days. If you are for preapproval, there are a few steps you could take. Review your application to find any mistakes or increase the amount of the amount of your down payment, decrease your overall debt or try an alternative lender. Before attempting to work with a different lender be sure to be sure to discuss the reasons of the rejection with the one you applied with. The information you must provide in order to prequalify or get preapproved Preapproval and prequalification require some of the same details. Be prepared to provide the following information: Personal information, such as your name, address , and your phone number. Financial information, including your income and your housing payment. Details about the loan, including how much you want to take out. The preapproval process will likely require additional details, such as the Social Security number and birthdate so that the lender will be able to pull your complete credit report. This is known as an "hard credit pull" and will temporarily lower your credit score several points. The bottom line Prequalification and preapproval are two helpful tools for gauging how much you can spend on an auto loan. Preapproval can also help you obtain a better deal at the dealership if considering financing through it. However, the deals can't be guaranteed, so choose prudently when shopping. Learn more


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Written by

The article was created with the help of automation technology, and then checked for accuracy and editing by an editor on our editorial staff.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to take control of their finances by providing precise, well-researched and accurate information that breaks down otherwise complex topics into manageable bites.






Auto loans editor


Review by Mark Kantrowtziz. Reviewed by Nationally recognized expert on student financial aid

Mark Kantrowitz is an expert on student financial aid including the FAFSA and 529 plans, scholarships as well as tax benefits for education and student loans.






Nationally anerkannt student financial aid expert




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