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How to get preapproved for an auto loan and gain negotiation power Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial decisions by offering interactive tools and financial calculators as well as publishing original and impartial content. This allows users to conduct research and compare information for free to help you make informed financial decisions. Bankrate has agreements with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site come from companies that compensate us. This compensation could affect how and when products are featured on this site, including, for example, the order in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity and other home loan products. But this compensation does affect the content we publish or the reviews that appear on this website. We do not cover the vast array of companies or financial deals that may be available to you.



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4 min read . Published March 07, 2023
Authored by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ins and outs of securely using loans to buy a car.







Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances by providing precise, well-studied information that break down complex subjects into bite-sized pieces.









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When it comes to , you must do everything you can to control negotiations. The application process to get an auto loan preapproval is a way to have an edge when buying a car. This means a potential lender has looked at your credit history, application as well as the required documentation and is willing to give you a formal loan offering of a specified amount. It's true that the terms are sometimes used to refer to the same thing. If you are prequalified for a loan then the lender only performs a soft credit check, and your approval isn't assured until you have submitted the full application. Preapproval for the car loan just takes a few minutes of additional time and ensures that you've got a solid idea of how much you'll be spending when you go car shopping and also the amount you'll likely be offered. Step 1. Make sure you have all the documents needed. may be preapproved for an auto loan through online lenders, banks or credit unions. Whichever option you choose, the first step is collecting the necessary information for an application. This includes: Personal information like your name, Social Security number, driver's license, information about your contact and your address. Income, including your employer's name, contact details and your annual income. The documents you will be required to submit could include the W-2, tax return as well as pay slips. The amount you'd like to finance as well as the desired auto loan duration. Information on the condition as well as the mileage on your car if you're buying used. Details about the trade-in, if applicable. Tips from the Bankrate
To make the process easier, you should gather the necessary financial documents prior to the deadline and save them in PDF files on your computer.


Step 2. Find out about loan options Just like you shop around for your automobile, it's also a good idea to . Your interest rates are dependent on your credit score along with other aspects and may vary by lender. When you shop for a different lender, you might be able to get better rates, in addition to obtaining better loan terms. Finding a rate of interest that is even a tenth of a percentage point lower could be a significant difference in the amount you'll pay over the life of a loan. For the best rate apply with several lenders. Bankrate's advice
Take a look at Bankrate's top picks for the to start your search.


Step 3. Submit the preapproval application In most cases the process of applying for preapproval will be similar to a typical complete loan application. It is possible to apply online, over the telephone or in person. If you opt to submit your application online, you should research the most reliable lenders. However you decide to complete your application -online or in person -- you should expect to take around 15 minutes to complete each application. Certain lenders have an complex preapproval process and some may require an absolute credit score or information about vehicle age and mileage. Find out more information about the requirements for applying on lender websites before applying. Once you've provided the required information, most applications are typically processed in about 30 minutes. Bankrate tip
When you have your loan is preapproved, you typically have 30 to 60 days to look for a vehicle before the loan offer ends.


Benefits of benefits of auto loan preapproval. A car loan preapproval offers many benefits, including putting you in control when it comes to negotiating the most favorable deal and obtaining the best interest rates available. Confidence Dealerships can feel overwhelming, and the car-buying procedure can be overwhelming. Entering this process with an approved loan offer in hand offers the buyer a sense of security and convenience. With the preapproval of a loan you already have a clear idea of your loan term and interest rate. This makes it simpler to determine your monthly payment in relation to the price you negotiate with a dealer. Instead of worrying about finding the right financing for your vehicle, you can focus on what you want and how you live your life. Protection from unnecessary add-ons when closing a deal on an automobile, particularly when purchasing a car that is financing by a dealer and the sales team tends to make it easier for them to increase their profit. This might include such extras like rustproofing the car or fabric protection as well as extended warranties. By coming in with an approved auto loan and having an established number in mind. This can make it much simpler to turn down additional costs that aren't part of your budget for purchases when it's time to conclude the purchase. Better grasp on expected cost The real cost can be higher than expected for those who are buying for the first time. A clear estimate of what you can borrow will make it simpler to budget and ensure that you are realistic when shopping. You should calculate potential auto loans ahead of time to determine how much you can comfortably take out. When you calculate your monthly costs make sure you include the cost of auto insurance. It's also possible to search for insurance quotes for the vehicle you're thinking of buying to ensure you understand what the true, full cost will be. Stronger negotiation power Although dealership financing can be a good idea for some drivers, preapproval means you will not be able to take advantage of the finance options suggested by the salesperson. Dealers will also be aware of your dedication to purchasing a car and are likely to seek to win your business. They might even be able to offer a more competitive rate from their lender network. The next step if you're planning to buy a car and are preapproved on a car loan will provide you with a clear estimation of the amount you can spend. It also puts you in control when it's time to negotiate. Before submitting your application for preapproval, gather the necessary documents. If you are planning to apply online, be certain to find reliable lenders. One of the most effective ways to check this are by looking up the lender's Google reviews from previous customers and then analyzing their rating with the Better Business Bureau and Trustpilot.


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Authored by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ins and outs of securely borrowing money to purchase the car they want.



The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to take control of their finances through providing precise, well-studied facts that break down otherwise complicated topics into bite-sized pieces.






Auto loans editor




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