How To Get a Preapproved Car Loan

Getting preapproval gives you more negotiating power and helps you secure the best rates

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Written by
Lauren Nicholson
Updated November 12, 2024
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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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To get a preapproved auto loan, you’ll need to apply online directly with a lender. Your credit score will temporarily drop by a few points when you apply for a preapproved loan because lenders check your credit history in order to offer you real rates.

Navy Federal Credit Union: Best for those with military connections

4.09%

12 to 96 months

From $250

Not specified

Pros
  • Preapproved offer is good for 90 days
  • APR discounts for active-duty and retired military members
  • Offers car-buying service
Cons
  • Exclusive to borrowers with military ties
  • Preapprovals not available for private-party purchases

What to know

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If you receive a preapproval offer from Navy Federal Credit Union, it’s good for up to 90 days, giving you plenty of time to complete your car purchase. Customers can shop for vehicles with Navy Federal’s car-buying service, and active and retired military members may qualify for a 0.25% annual percentage rate (APR) discount.

While Navy Federal Credit Union offers competitive auto loans, they are only available to borrowers with military ties, and preapprovals can only be used for dealership purchases.

Read our full Navy Federal Credit Union auto loan review.

Eligibility requirements

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Navy Federal Credit Union only offers membership to consumers with military connections. You’ll need to meet at least one of the following requirements to qualify:

  • Active-duty member of any military branch
  • Delayed Entry Program enlistee
  • Department of Defense officer candidate, ROTC, reservist or civilian personnel
  • Veteran, retiree or annuitant
  • Family or household member of any of the above
See Personalized Results Read Our Expert Review

Southeast Financial: Best for short-term loans

4.25%

12 to 84 months

Up to $100,000

600

Pros
  • No restrictions on model year
  • Can qualify for terms as short as 12 months
  • Can apply to skip up to two monthly payments a year
Cons
  • Must become a credit union member
  • Bank branches limited to a handful of locations in Tennessee

What to know

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Southeast Financial Credit Union (SFCU) offers short-term auto loans — as short as 12 months. The shorter your repayment period, the less money you’ll pay in interest over the life of the loan. It can be a challenge to find a lender willing to finance an older vehicle, but SFCU doesn’t place any restrictions on model year.

You’ll need to become a member of the credit union in order to close on your loan, which adds another step to the process.

Eligibility requirements

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To become a Southeast Financial Credit Union member, you’ll need to open a savings account with them and make a $5 deposit. You’ll also need to meet at least one of the following requirements:

  • Make a $5 donation to Autism Tennessee
  • Be a current or retired employee of Southeast Financial Select Employee Group
  • Be a relative of a Southeast Financial Credit Union member
  • Live, work, worship, go to school or volunteer in a qualifying Tennessee or Kentucky community, Tishomingo County, Miss., or Corinth, Miss.
See Personalized Results

Bank of America: Best for those who prefer large banks

5.69%

48 to 72 months

From $7,500

Not specified

Pros
  • Offers loans in all 50 states
  • Offers a variety of auto loan types
  • Preapproval as quickly as 60 seconds
Cons
  • Loans not available for purchases at independent dealerships
  • Rate discounts only available to Preferred Rewards members
  • Minimum loan amount is high

What to know

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Bank of America is one of the largest banks in the U.S. and offers financing in all 50 states. You can also qualify for a wide variety of loans, including lease buyouts. Once you submit your information, you may receive a preapproval in as few as 60 seconds.

While there are rate discounts available, they are exclusive to Preferred Rewards members and the bar for qualification is high. Auto loans are also not available at independent dealerships except for CarMax, Enterprise and Carvana.

Read our full Bank of America auto loan review.

Eligibility requirements

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While Bank of America doesn’t state its minimum credit requirement, it does require that your vehicle check the following boxes:

  • No more than 10 years old
  • Must have fewer than 125,000 miles
  • Value must be at least $6,000
See Personalized Results Read Our Expert Review

LightStream: Best for fast funding

7.24% (with autopay)

24 to 84 months

Loan Term Disclosure

Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $25,000 loan at 7.49% APR with a term of 3 years would result in 36 monthly payments of $777.54. © 2024 Truist Financial Corporation. Truist, LightStream and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

$5,000 to $100,000

Not specified

Pros
  • Fast loan decisions and funding
  • Autopay discount
  • No model age or mileage restrictions
Cons
  • Relatively high starting APR
  • Only for borrowers with good or excellent credit
  • Lowest rates only for borrowers with excellent credit

What to know

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Getting your loan funds typically takes a few days, but LightStream loans can be deposited into your account as soon as the day you apply. Even if you’re still searching for the best rate, you can bring your LightStream loan terms to a dealership or another lender to negotiate the best rates.

LightStream likely isn’t for you if you have poor or fair credit, since they only approve applications from borrowers with good credit. Even if your credit score is in the “good” range, know you’ll likely pay a much higher interest rate than the starting rate, which is reserved for borrowers with excellent credit.

Read our full LightStream auto loan review.

Eligibility requirements

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While LightStream doesn’t specify a minimum credit score, having the following increases your odds of approval:

  • Good or excellent credit
  • Years of credit history
  • A variety of credit accounts, like loans and credit cards
  • Money in checking, savings or retirement accounts
  • A good debt-to-income ratio
  • Solid payment history
See Personalized Results Read Our Expert Review

Carvana: Best one-stop shop

7.90%

36 to 78 months

From $1,000

Not specified

Pros
  • Convenient online financing and car shopping
  • Get preapproved for a car loan without affecting credit
  • Preapproval valid for 30 days
  • Financing available for people with bad credit
Cons
  • Financing offer only valid for Carvana cars
  • Higher starting APR than other options on this list
  • Can only purchase used cars through Carvana

What to know

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Carvana makes the car buying process simple by offering in-house loans to customers. When you apply for preapproval with Carvana, you’ll see real rates without damaging your credit score. Note that if you do decide to get a loan with Carvana after seeing your rates, they will perform a hard credit pull. This will temporarily impact your credit score.

Carvana’s preapproved auto loans aren’t a good option for new car buyers, since Carvana only has used cars in its inventory.

Read our full Carvana auto loan review.

Eligibility requirements

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Carvana loans are available even if you have bad credit, so long as you:

  • Are 18 or older (19 in Georgia and Alabama)
  • Have an annual income of $5,100 or more
  • Don’t have an active bankruptcy
See Personalized Results Read Our Expert Review

How to get preapproved for a car loan

To get preapproved for a car loan, you’ll need to do some prep work in advance. Start by setting a budget to be sure your new ride won’t break the bank and use a car affordability calculator to help you plan your purchase.

Next, check your credit score and credit reports to be sure you can qualify for low interest rates. Generally, the higher your score, the lower the interest rate you can receive, saving you money over your loan term.

Finally, gather up any documents you’ll need, including a government-issued form of ID, your mortgage or rental agreement and recent pay stubs, W-2s or bank statements.

Once you’re ready to shop around, compare the preapproved offers you receive to determine which loan is the best fit for your needs. Pay particular attention to interest rates, fees, repayment terms and loan amounts.

On this page

Why get a preapproved auto loan

It helps you plan your car purchase

Getting preapproved can help you eliminate the guesswork of creating a budget for your car. When you’re looking at car prices, use the 20/4/10 rule as a guideline for how much you can afford.

By offering a 20% down payment, choosing a loan term no longer than four years and keeping your total transportation costs under 10% of your total income, you can avoid getting stuck with an auto loan that’s too expensive for your budget.

You can avoid dealer markups

Dealers inflate the interest rate they offer and may charge extra dealer fees to make a profit. 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 consider the total cost rather than monthly auto loan payments, giving them the upper hand when negotiating a car price. Similarly, when you have a preapproved auto loan, it’s much easier to avoid a sales pitch that could increase your monthly rate.

Where can I get an auto loan preapproval?

Plenty of financial institutions offer car loan preapprovals, including banks, credit unions and online lenders. Here’s what you need to know:

  • Banks: National banks offer convenience and provide services beyond auto loans, like savings and checking accounts, credit cards and financial advice. Keeping all of your financial transactions with one institution makes it easy to stay organized and may even qualify you for discounts.
  • 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 donation to a nonprofit organization.
  • Online lenders: Without the overhead that credit unions and banks face, online lenders can offer competitive rates. You can fill out an online form at LendingTree and receive auto loan offers from up to five lenders.

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 submit all your applications within a 14-day window, FICO and VantageScore count multiple inquiries for the same type of loan as one hard credit pull.

What will I need to get an auto loan preapproval?

Application requirements for car loan preapprovals are similar to a regular car loan application. Be prepared to supply the following details:

  • Loan information: You’ll need to know how much you want to borrow and for how long. Keep in mind that a long auto loan term may have smaller monthly payments, but higher total interest charges. You’ll also need to provide information about the car, including its age, make, model and mileage.
  • Personal information: Lenders will want to know your name, contact details, date of birth and Social Security number. You may have to provide a copy of your ID.
  • Residence information: You’ll need to specify your address, length of residency, whether you rent or own and the amount of your monthly rent or mortgage payment. You may also have to provide a utility bill or a copy of your lease or mortgage agreement.
  • Income information: Your gross annual income can show lenders whether you can afford the loan. You’ll also need to provide your employer’s name and contact details.

How to buy a car with a preapproved loan

Once you have a preapproved car loan offer, you can take it with you to the dealership, lot or private-party sale. If the dealership doesn’t offer you a loan with better rates, you can move forward with your preapproved loan.

How you’ll use your preapproved loan to buy a car will depend on your lender. LightStream, for instance, will transfer the loan funds directly to you so that you can pay for the car with cash. If you get a loan from Bank of America, you’ll print out your approval letter and present it to the authorized dealer or approved independent dealer, like CarMax.

 Don’t forget about insurance

While you’re shopping around for a car loan, don’t forget to take other expenses into account, especially car insurance. Just like with a loan, you can save money if you shop around and compare car insurance rates.

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Car loan preapproval vs. prequalification

The differences between getting preapproved versus prequalified for a car loan can be confusing. Car loan prequalification typically involves a soft credit check that won’t impact your credit. It isn’t an official offer, but rather an estimate of the car loan terms you may receive. Because a prequalification isn’t firm, it’s less helpful when negotiating at a dealership.

On the other hand, preapproval will typically require a hard credit pull, which can temporarily bring your credit score down by a few points. The preapproval process may also be much more rigorous as lenders take a closer look at your income and credit history. Like prequalification, a preapproval is not a firm offer, but your actual interest rate will likely be very similar, if not the same, as your preapproval rate.

PreapprovalPrequalification
  • Provides a more accurate estimate as to what your lender may offer
  • A rough estimate of the loan offer you may receive
  • Lender performs a hard credit pull, which can temporarily impact your credit
  • Lender performs a soft credit pull, which should not affect your credit
  • APR is unlikely to change
  • APR is likely to change
  • Offers a firm negotiating position
  • Not helpful when negotiating with the dealer

How to shop for an auto loan with LendingTree

  1. Check your credit. Before you shop around for auto loan rates, check your free credit score with LendingTree Spring. Once you find out your score, you can use this to research average APRs in your credit score range and whether the offers you get are competitive. If your credit is poor or fair, consider taking the time to improve your credit score before taking out a loan to qualify for lower rates and better terms.
  2. Choose your car. Pick the vehicle you’d like to finance so you have an idea of how much you’ll need to borrow to purchase your dream car. As you consider your options, keep in mind the 20/4/10 rule for car buying.
  3. Prequalify for a loan. When you fill out our form, LendingTree acts as your car loan shopper and you’ll be able to compare rates. With a network of 300+ lenders, LendingTree is the nation’s largest loan marketplace.
  4. Formally apply for a car loan. When you apply with LendingTree, you could get several offers from up to five lenders. Once you choose your lender, we’ll help you navigate submitting a formal application.
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How we chose the best preapproved auto loan lenders

In order to identify the top five lenders, we used the following criteria to systematically rate and review lenders that offer preapproved car loans 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 share the criteria they use to judge creditworthiness, that offer seamless 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 a variety of loan term lengths. We also considered whether lenders charge fees for applying or for paying off the loan early.
  • Customer satisfaction. We considered whether lenders have any recent actions or serious complaints lodged against them per the Consumer Financial Protection Bureau. We also looked at consumer resources like Trustpilot to determine whether customers are likely to have a good loan experience.

Based on these criteria, we reviewed our top picks for car loan preapprovals, evaluating them based on the pros and cons we identified in our ratings.

Frequently asked questions

Getting preapproved for a car loan can temporarily damage your credit score, since lenders typically perform a hard credit pull. If you get preapproved with multiple auto lenders, FICO and VantageScore will only count it as one inquiry as long as you do it within a 14-day window.

Yes — many lenders offer borrowers the option to get preapproved car loans online. Easy online applications can streamline the car-buying process, but you’ll need to have a good credit score to qualify for a preapproved car loan.

The amount of time it takes to get preapproved for a car loan depends on the lender. It can take anywhere from a few seconds to a few days for lenders to deliver their decisions.

Preapproval is not a firm offer nor a guarantee that you’ll receive a loan. However, it is a more accurate estimate than prequalification of what a lender may be willing to offer you.

You also can be denied for a preapproved car loan. Although some lenders offer auto loans for bad credit, your application is more likely to be rejected if your credit score is low. If this is the case, consider using a cosigner for your car loan and taking steps to improve your credit score.

Getting preapproved for a car loan may be a good idea since it can help you save money. This is because preapprovals offer a more on-the-nose estimate as to what your final loan offer will be. This can put you in a better negotiating position.

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