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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 providing you with interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct research and compare data at no cost - so that you can 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 Make Money The deals that are displayed on this website are provided by companies that pay us. This compensation can affect the way and where products appear on this site, including for instance, the order in which they be listed within the categories of listing in the event that they are not permitted by law. This applies to our mortgage or home equity products, as well as other home lending products. This compensation, however, does affect the information we publish, or the reviews you read on this site. We do not include the universe of companies or financial offers that may be accessible to you.



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3 min read published November 02, 2022.
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The prequalification process and the preapproval procedure are different methods of getting an initial review of your options when it comes to financing for your vehicle. Prequalification is less rigorous and requires you to provide the most basic details regarding your financial situation and gives you estimates of what rate and terms you may be eligible for. Preapproval requires you to share more personal and financial information with a lender since it is essentially a partial application. Prequalification is different from preapproval A is a formal request from an lender and comes with terms, and is an estimate of the type of you could be able to get in terms of car loan terms you might qualify for. Since prequalifications aren't firm, it's not much useful when you're negotiating with the dealership. However, regardless of whether you choose a car loan either prequalification, or preapproval, neither are guaranteed offers -the final approval of your loan will be contingent on the underwriting department of the lender making sure there are no surprises in your full credit history , as well as other aspects, like employment and income verification. Advantages of auto loan preapproval and prequalification Both preapproval as well as prequalification permit you to have a good grasp on how much money you are able to borrow, and how much you'll have to pay for it. Advantages of preapproval When you have preapproved means that you can shop with confidence, knowing that you will most likely receive the exact or identical interest rate. You can also use your preapproval rate as a point of with the dealership when you go to the finance office, and put the dealership under pressure to beat that rate. Benefits of prequalification a low-risk option to discover the kind of loan you can get particularly if you're not prepared to begin shopping in earnest. Your credit score isn't impacted since the lender won't run a hard credit check. Things to consider with auto loan prequalification and preapproval If you prequalify for an auto loan, you get an estimate of the loan amount and rate you will be offered. Then, you can use this information to compare prices to find the best rate however, be aware that prequalification isn't an actual offer. Rates aren't guaranteed -- and their legitimacy is contingent on how precise the information you give is. Preapprovals aren't a guarantee either. If your income, job or credit drastically change between when you are preapproved and when you apply, you could be denied the loan. Keep this in mind while shopping, and be mindful about spending, particularly when using credit cards. How do I be preapproved for a car loan If you decide that a car loan is right for you, you'll be required to gather all the documents and fill out an application for preapproval. It is recommended that you research several reputable lenders before applying. Once you've been preapproved by a lender, you'll have a firm idea of what you can pay and will be in control when it comes time to bargain. Preapproved car loans generally last for between 30 and 60 days. If you're preapproved and you are not sure, there are some steps you could do. Review your application to find any mistakes and increase your down payment, reduce the total amount of debt you have or consider another lender. Before attempting to work with a different lender, however, talk about the reason of the rejection with the lender you made an application with. Details you will need in order to prequalify or get preapproved Preapproval and prequalification require certain information. Prepare to supply personal information such as your name, address , and phone number. Financial information, which includes your income and your housing payment. Information about the loan, including how much you want to borrow. Preapproval is likely to require you to submit more information, including details about your Social Security number and birthdate to ensure that the lender can access your complete credit report. This is referred to as hard credit pull and will temporarily lower your credit score several points. In the end, prequalification and preapproval are two useful tools for gauging how much you can pay for the auto loan. Preapproval could even allow you to obtain a better deal at the dealership if you're considering financing through it. However, the deals aren't guaranteed, so spend wisely while you're shopping. Find out more


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This article was generated by using automated technology. It was then thoroughly verified and edited by an editor on our editorial team.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to control their finances by providing clear, well-researched information that breaks down complex topics into manageable bites.






Auto loans editor


Reviewed by Mark Kantrowtziz Reviewed by Nationally known student financial aid expert

Mark Kantrowitz is an expert on student financial aid including the FAFSA, scholarships, 529 plans educational tax benefits, student loans.






Nationally acknowledged expert in student financial aid




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