Question: I got pre-approved for a car loan from my bank. But before they’ll approve the final loan, they want a purchase order from the dealership. I’m not sure what that means—what is a purchase order for a car, and how do I get one?
Answer: A purchase order from a dealership—also known as a car buyer’s order— is a contract that’s similar to a bill of sale. Once you and the dealer both sign it, the purchase order is a legally binding document. You can only back out of the sale after the order is signed in certain cases, like when your financing with the dealer isn’t approved by a financial institution.
Why do I need a purchase order?
The purpose of a purchase order is to make sure that everyone’s on the same page regarding all of the details of the sale. It gives you a chance to review everything that impacts the final price that you’ll pay and resolve any remaining questions.
A dealership is generally required by law to provide you with a copy of the purchase order once you start negotiating to buy a vehicle. Once you agree on the final sales price, they must give you a completed purchase order.
If you’re financing the car, your lending company will need the purchase order to verify the amount of the loan. It is generally sent to the lending company by the dealer.
What’s included in a purchase order?
Your purchase order will include an itemized list of anything included in the final purchase price, including the sticker price, interest rate, loan terms, taxes and fees, rebates, your down payment and add-ons like GAP insurance. It will also include the date of the sale, your name and address, and the dealer’s address.
A purchase order will also have information about the specific vehicle you’re buying, including the:
- Make
- Model
- Trim and optional packages
- VIN
- Current mileage
- Warranty
Carefully read the fine print in your purchase order: Before you sign on the dotted line, read over the purchase order carefully to make sure you understand any fees or add-ons included in the final purchase price. Also verify that all of the financing terms are exactly what you agreed to, including the interest rate and length of the loan. Remember, the document becomes legally binding once you sign it.
Why do I need a purchase order if I’m already pre-approved for a loan?
When a lender pre-approves you for a loan, they’re guaranteeing that you’ll be able to borrow up to that pre-approved amount. But the exact loan amount can’t be finalized until you choose a vehicle to purchase and negotiate the fees associated with it. The purchase order provides the final cost information to your lender so they’ll know exactly how much you need to borrow.
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars. Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.
Eric Schad is an insurance writer with over a decade of experience writing in the insurance, music, and finance industries. Eric’s mission is to craft compelling writing that answers car owners’ most-often-asked questions in a straightforward, easy-to-understand way. Eric has written close to 8,000 short-form articles for Jerry. Prior to joining Jerry, Eric had years of experience in freelance copy and web content writing.
Everett Cook is an award-winning journalist and editor with more than 10 years of experience across a variety of industries. In editing for Jerry, Everett’s mission is to help readers have a better understanding of the costs of owning or leasing a car and to better understand their vehicle in terms of insurance and repairs. Prior to joining Jerry, Everett was an editor for Axios. His previous work has been featured in The New York Times, The Los Angeles Times, The San Francisco Chronicle, The Atlantic, Atlantic Re:think, The Boston Globe, USA Today, and others. He’s also been a freelance writer and editor with experience in SEO, audience building, and long-term content roadmaps. Everett is a proud graduate of the University of Michigan.
