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.