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What does preapproved for a car loan mean?

My bank told me when I went in to get a car loan that I qualify for preapproval. What does it mean to be preapproved?

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Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
If you’re preapproved for a car loan, that means you meet the bank’s lending requirements and they agree to lend you a specified amount of money at a specified rate.
There are significant benefits to getting preapproval:
  • First, you can lock in an agreed-upon interest rate.
  • Second, you’ll be better able to estimate your monthly car expenses to determine whether or not you can afford to go through with the loan prior to signing on the dotted line.
  • Lastly, you’ll know exactly how much car you can afford when you walk into the dealership, which makes you like a cash buyer. This can help you negotiate a better price on the car you want.
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