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?

Answer
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.
Once you purchase your new vehicle, download the Jerry app to get great car insurance at a great price. Jerry collects quotes from 50+ top insurance companies (like Nationwide, Allstate, Safeco, Progressive, and Travelers) in 45 seconds and delivers the best deals straight to you in minutes. The average Jerry user saves $879 a year on car insurance.
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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