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?

Answer
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.
Eric Schad
Answered on Nov 16, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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