When looking for car loan approval advice, you’ll see heaps of experts telling you to get a pre-approved car loan. But what is it exactly and why does it come so highly recommended? In this article, we give you all the information you need about car loan pre-approval.

Learn the process of getting a pre-approved car loan, its benefits, and much more.

What is car loan pre-approval?

A car loan pre-approval is when a lender, in principle, agrees to grant a borrower a certain amount of money for a loan. The lender will do the usual checks looking at your credit score, income, debt, and other factors that affect your current financial situation. After, the lender will give you a pre-approved amount that tells you how much you can borrow.

Take note, a pre-approval doesn’t guarantee you’ll be formally approved for a car loan. A pre-approved car loan is only conditional approved which means it is subject to change once an official application with all relevant documentation is submitted to the lender. When you apply for a car loan, that’s when you’ll receive unconditional approval.

Remember, your car loan pre-approvals don’t last forever. Typically, pre-approval lasts from three to six months or less depending on the lender. Once you get pre-approved, it’s best to start searching for a car to purchase so you’re not pressed for time.

How do I get car loan pre-approval?

At Aussie Car Loans, you can apply for pre-approval online or contact us so we can get started on your pre-approval car loan application.

The requirements for your pre-approved car loan application are similar to a regular loan application. You’ll be asked to submit your personal information and lenders will review your current financial situation by looking at your income, debt, assets, and the like.

Reasons to get a car loan pre-approval

Getting a pre-approved car loan gives you many advantages when making a car purchase. Here are just some of the many benefits of getting a car loan pre-approval:

Budget more efficiently

With car finance pre-approval, you’ll know the maximum amount you can borrow. This will help you set a budget you can work with and find the best vehicle within that range. Having a budget will also prevent you from buying a car that you can’t afford.

Greater purchasing power

Sometimes, sales staff don’t take shoppers seriously because they’re so used to people window shopping with no real intentions to buy. A pre-approved loan shows sellers that you're serious about buying a car and you’ve got the means to make the purchase. It puts you in a stronger position to receive better offers from the vendor too.

Negotiate with confidence

Along with the improved buying power, you’ll also get better negotiating power with a car loan pre-approval in your pocket. You can bargain for a lower price or more freebies and you will likely get it. Why? Because the sellers know that you are a sure buyer. So, they will do everything they can to keep you as a customer and close the sale. To do that, they must keep you happy, or you’ll walk away and find a better deal somewhere else.

Avoid expensive car finance

Other car loan products like dealership or seller financing are usually more expensive and have higher interest rates. Those who don’t get pre-approved may not be aware how much costlier these other loan products are. When you have a pre-approved loan, you can stick to your choice of financing letting you save more money on repayments.

Be ready to bid at auction

Pre-approved car finance is a must if you’re buying a vehicle at an auction. It would be reckless to make a bid without the ability to make a purchase. If you’re armed with pre-approval and the knowledge of your maximum loanable amount, you’ll be able to bid with confidence. Once you become the auction winner, you’ll also be able to proceed with the purchase more easily.

Faster car loan processing

A pre-approved car loan will significantly reduce the overall processing time once you’ve found the right car. Whether you’re purchasing a car for a business or personal needs, a pre-approved loan will help you finalise the deal right away. This is helpful, especially if you’re working on a tight timeframe.

What to do if you can’t get pre-approved

You may be rejected for car loan pre-approval for a number of reasons such as having bad credit, you can’t provide proof of savings, or having too much debt. In cases like these, you may want to hold off on your purchase and loan application until you improve your financial status.

It’s also not advisable to try and get pre-approval from other lenders once you’ve been rejected because every time you apply for a loan, even for a pre-approval, it’s going to be recorded on your credit history as a hard check, which may lower your credit score by a few points.

It’s important to note that you may also get rejected for a loan even after you’ve received pre-approval. Here are reasons why your loan application could be rejected after you’ve been pre-approved:

  • You’ve changed jobs and your income or your employment status has changed.
  • You can no longer make the initial deposit.
  • You’ve acquired more loans.
  • Your credit score has decreased.
  • The lender has changed their lending criteria.
  • The vehicle you want to buy is not acceptable for the lender.
  • There was a rise in interest rates.

The best thing to do when you’re rejected for a pre-approved car loan is to fix the reasons you were rejected. Get in touch with your lender to ask what you should improve on to give you a better chance at approval next time you apply. Some tips to get approved for a loan include:

  • Providing more or better documentation of your income, assets, and the like.
  • Staying in your job for a long period of time.
  • Finding a better vehicle that complies with the lender’s standards.
  • Raising your credit score.
  • Having more savings.
  • Paying off your loans or other debt.

While you’re improving your financial status, start looking at other lenders and researching their rates and loan criteria. You may find another loan that’s more compatible with your needs.

Apply for pre-approval with Aussie Car Loans

As you can see, pre-approved car financing has many benefits. But there are things you need to be aware of before you delve right in. If you want a stress-free, hassle-free pre-approval loan application, Aussie Car Loans can help you get pre-approved finance in minutes with the lowest possible rate.

Let us do the hard work for you and source the best finance deal. Talk to one of our finance experts today or fill in our online application form.


Does a car loan pre-approval affect my credit score?

Yes, your car loan pre-approval can negatively impact your credit score. When applying for any loan, lenders will send a hard credit inquiry into your credit history which lowers your credit score by an estimated five points or less.

Does it take a long time to get a car loan pre-approval?

You can get pre-approved for a car loan in around three to four days. Some lenders can provide approval on the same day. It depends on the lender’s process and if you’ve provided sufficient information.

How long is a car loan pre-approval valid for?

A pre-approved car loan is only valid for a limited time. Depending on the lender, your pre-approval can last for around three to six months, sometimes even less.

What happens if I want to buy a car that is more expensive than my pre-approved loan amount?

If you want to buy a car that’s more than your pre-approved amount, you may be expected to pay for the difference out of pocket. Discuss with your lender about the possibilities in detail before you choose a car to buy.

Can I use a pre-approval from one lender to negotiate with another lender?

You can discuss your pre-approval from one lender with another lender, however, it’s not a guarantee you can get a better deal. You don’t have to stick to the same lender that gave you a pre-approved loan. Shop around and see if you can find better loan rates elsewhere, but be mindful that multiple pre-approvals are likely to reduce your credit score.

What happens if I don't use my pre-approval before it expires?

If your pre-approval expires, get in touch with your lender immediately to discuss extending the validity so you avoid re-applying. You may be asked to submit more recent documents, but otherwise, updating your pre-approved loan’s validity shouldn’t be too complicated depending on the lender.