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How do I buy a car with a preapproved loan?
I'm shopping around for a car, but I'll need to finance part of the cost. A friend told me that I should always get preapproved for a loan—but if I'm honest, I don't even really know where to start with all of this. How do I buy a car with a preapproval?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“That’s a great question! Preapproval is a smart way to determine how much you can spend on a car and have all your affairs in order before you head to the dealership. While it’s similar to getting a
car loan
, it’s not set in stone—a preapproval just lets you know how much you’ve been approved for, so you can shop for cars within your price range.To get a preapproval, start by looking at car loan rates with national banks, local banks, and credit unions. Once you’ve found the lowest rate, you can start the preapproval process. For preapproval, you’ll need to gather the following documentation:
- Driver’s license
- Social Security number
- Proof of income, such as pay stubs or tax returns
- Employment verification
- Proof of residence
The lender will gather these documents and review your credit report to determine how much you’re preapproved for. Note that you don’t have to spend the entire preapproval amount—it’s just there to act as a guideline.
Another good reason not to max out your preapproval loan is that you still need to budget for other costs like maintenance, gas, and car insurance. As part of the stipulations of your loan, you have to maintain full coverage car insurance, which is one of the biggest expenses on a new car.
One easy way to make sure you’re getting the best deal on the coverage you need is to use the
Jerry
app. We’ll get you customized quotes from top insurers in seconds so that all you need to do is choose the plan that works best for you! (And once you pick, we’ll even help you switch over.)Best of luck with the loan, and happy shopping!”
View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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