Car Buying: Auto Loan Preapproval

Take the hassle and uncertainty out of financing a new vehicle by getting preapproved for your auto loan.

By Navy Federal January 3, 2019
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Test driving a car can be so much fun—driving along, picturing all the places you'd go and the things you'd do with a shiny new car. But, as you're imagining the possibilities, make sure you pause to consider priorities like good rates, solid loan terms and a sensible vehicle.

One of the best ways to make sure that you find a car that's perfect for you and that matches your finances is to get preapproved before you start shopping. Here's how a preapproval gives you an edge in your auto-buying journey.

You Know How Much You Can Spend

If you're in the market for a new car and know you’ll need to finance it, your first step should be applying for preapproval with your bank or credit union. It gives you an edge because before you even visit a dealer, you’ll know how much you can finance, your estimated interest rate, how long you'll have to pay back the loan and an estimate of your monthly payment. That's powerful knowledge, because you won't waste your time on vehicles that aren’t a match.

You Can Shop Like a Cash Buyer

When you walk in the door armed with a preapproval, you have the upper hand because you can shop just like a cash buyer. You’ll have more power to negotiate because you'll know your absolute maximum price, and you'll be able to negotiate price and not payments. That can save you some serious money. How? Because if you try to pick a monthly payment, you could end up with longer terms (pay-back period) at a higher interest rate, which means you could end up spending more for the car in the end.

You May Get a Lower Rate

Getting preapproved from a trusted financial institution will not only will tell you how much you can spend, but it also might provide you a lower interest rate than what a dealer can offer. And, the lower the interest, the less you’ll pay overall.

When you find a car you like, most dealers will offer you financing. With a preapproval, you'll know right away if the rate and terms they're offering are good for you. You won't be forced to use their lender and take their deal if you don’t want to because you’ll have already have financing lined up.

Frequently Asked Questions

How do auto loan preapprovals work?

Getting preapproved for an auto loan is simple, and when you use your financial institution, you're working with people you already know and trust. At Navy Federal, we understand you don't always have a lot of time to wait, so we usually can give you a decision in seconds. Here's what you’ll need:

  • Your housing, employment, income and contact information
  • The amount you expect to finance (be sure to include vehicle price, taxes, tags, title and warranty, less any down payment)
  • Trade-in information, if any
  • Length (term) of the loan you want

If you've already decided on a vehicle you want to purchase, you'll also need to know the vehicle identification number (VIN), the exact mileage, the state in which it will be registered and the dealer’s name.

When should I apply for preapproval, and does it guarantee I’ll get a loan?

Wait to get preapproval until you’re serious about buying a car and know your credit score, because applying will have an impact on your score. While it doesn’t guarantee funding, it can be good indication of your ability to get financing and can help you know how much you can afford. That’s important information to have before you start shopping. Some lenders may even provide you with a check worth up to the preapproved amount, so you can take it to almost any dealership and pay for your car just like you would with cash.

Before you go car buying, apply online for a low-rate Navy Federal Credit Union auto loan or call 1-888-842-6328. With a Navy Federal preapproved auto loan, you’ll be better prepared to drive away in your new car.


This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.