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Can I be denied for a car loan even after I’m preapproved?
I got preapproved for a car loan about a week ago, but since then, my credit dropped about 20 points due to a collection account I didn't know about. Can I still be denied a loan after preapproval?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Unfortunately, you can still be denied for a
car loan
even after preapproval, but it’s exceedingly rare. The only reason this would happen is that your credit or financial situation has changed drastically between preapproval and actually signing the loan.Remember that preapproval doesn’t lock in an interest rate or guarantee approval. It’s just giving you a basic idea of what you can spend on a car and what your potential loan might look like.
In your case, a 20-point drop may or may not hurt your chances of loan approval. If you already had a credit score in the 700s, you’ll probably be fine. But if this 20-point drop puts you into the low 600s, you have reason to be concerned.
In the meantime, you should clear up the collection account as soon as possible. If you explain to the lender what happened and take care of it in a timely fashion, it may not hurt your approval chances at all.
Remember that you won’t be able to drive the car off the lot until you show proof of insurance. If you’re looking for the best coverage without overpaying,
Jerry
can help. Sign-up takes a mere 45 seconds, and you can compare competitive quotes from over 50 top insurers.View full answer
- Gregory R.
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