Can you be denied a car loan after pre-approval?

I'm looking into buying a car for the first time and am getting pre-approved. I was pretty confident, but then a friend said they still got denied after getting pre-approved. Can you be denied a car loan after pre-approval?

You can be denied a car loan after pre-approval. It is rare, but it can happen for several reasons, such as fine print, application errors, yo-yo financing, or multi-lenders.
Fine print: In the excitement of getting a new car and having the paperwork in your hands, you may skip over reading everything. Always check the fine print because sometimes financiers may give themselves a window to change their minds. It is generally around 30 days.
Application errors: When filling out the paperwork, double-check everything carefully and read it over aloud if you can. You tend to catch more errors that way. If you find an error and have already submitted the paperwork, contact your lender ASAP to try and fix it. Otherwise, the lender may use the mistake as grounds to cancel the pre-approved loan.
Yo-yo financing: This is a scam where dealerships will let you take the car home before financing is even complete. Then, they’ll call you back to tell you the financing fell through. This leads to you having to return to the dealership to re-negotiate. And often, you’ll find the new offer includes a higher interest rate than you originally agreed upon.
Multi-lenders: In some cases, especially with dealerships, they may apply for multiple lenders on your behalf. In this case, all the lenders must contact you and say whether they approve or not. So, you may get a yes initially and a no later because you’re speaking with different lenders.
To avoid many of these cases, take the time to read over the agreement before buying the car and wait until the ink is dry on the paperwork before taking the keys and driving home.
If you don’t like the agreement you ended up with, you can always refinance your loan down the line.
Refinance quickly and easily through the Jerry app. On average, those who refinance pay $85 less every month.
Lauren Smith
Answered on Nov 19, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.

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