Car loan pre approval

  • Get conditional approval for a car loan so you know how much you can borrow before you go car shopping
  • Free, no obligation call from a trusted car loan broker
Find a great loan with Money Matchmaker
Find a great loan with Money Matchmaker

In our car loan pre-approval guide:













What is car loan pre-approval?

Car loan pre-approval is conditional agreement from a lender to lend you a certain amount of money to buy a car. The lender is essentially agreeing to give you a car loan but holds off on approving it in full and releasing the funds until you have found a car to buy.

Pre-approval is only valid for a set period of time and is subject to final checks by the lender.

To get your car loan pre-approved, you’ll need to make an initial application with the lender.

It’s generally similar to the process for applying for full approval. The lender will want to know about your income, expenses, other debts and they will usually do an initial credit check. They do this to work out how much you can afford to borrow.

If the lender is happy with your application for pre-approval, they will agree (in writing) that you can borrow up to that amount.

To get full approval, you’ll need to find a car to buy before the pre-approval expires and pass some final lender checks.

apply for car loan pre approval

How do I get car loan pre-approval?

Getting car loan pre-approval can be very simple.

It usually involves these steps:

  • Compare lenders and pick the one that’s offering you the best car loan deal (bearning in mind that not all lenders offer pre-approval).
  • Check you meet the eligibility criteria (you’re over 18, an Australian citizen or permanent resident, have a regular income).
  • Make an application with the lender (you’ll be asked to prove your identity and provide information about your finances).
  • Provide any supporting documents you’re asked for (if you're not able to provide the standard documents, like payslips, you could consider a low doc car loan).
  • Wait to find out if your application is pre-approved (this can be the same day in many cases).

What happens after you get car loan pre-approval?

After you get car loan pre-approval, you can go car shopping with your budget locked in.

When you find a car, you’ll need to finalise your loan application.

The main thing here is giving the lender details of the car you want to buy.

  • If you’re buying with a dealer, you’ll need to provide a sales invoice.
  • If you’re buying from a private seller, the lender will typically ask to see a registration certificate for the vehicle.

They’ll also check if any of your financial or employment circumstances have changed since you were pre-approved.

If you’re given full approval, the lender will release the loan funds.

This can happen fast, as the lender has already done a lot of the work in processing your loan.

What are the benefits of having car loan pre-approval?

You might be thinking ‘why would I bother getting pre-approval for a car loan?’

I can just apply in full when I know what car I want to buy.

Here are some reasons why applying for pre-approval can be well worth it.

car loan pre approval budget

Helps you set (and stick to) a budget

Pre-approval lets you know how much you can get approved for with a lender.

Having this figure in mind means you won't:

  • Waste time looking at vehicles outside your price range
  • Be tempted by the inevitable upselling of extras and upgrades
car loan pre approval find better deal

Find a better deal

Looking at finance options before you go car shopping means you can focus on getting the best car loan deal possible.

When you’re at the car dealership you’ll have a million other things on your mind.

And without pre-approval you could be talked into potentially more expensive dealer finance.

See for yourself how much difference your car loan interest rate can make to your regular repayments and overall costs using our car loan calculator.

car loan pre approval negotiating power

Gives you negotiating power

Having pre-approval tells the car seller two things.

  • You’re a serious buyer
  • You have a top budget that won’t budge

The seller (be it a dealer or a private seller) will NOT want a serious buyer with finance lined up to walk away.

They may even all of a sudden be prepared to lower their asking price to match your pre-approved amount. What a coincidence!

car loan pre approval no obligation

There’s no obligation

Pre-approval is a limited time agreement from a lender.

But there’s no obligation on your part to actually go through with the loan if for any reason you ultimately decide not to.

car loan pre approval negotiating power

Makes the process faster

Cars are in very high demand right now and are being snapped up fast.

Having your finance pre-approved could help you seal a deal ahead of less prepared buyers.

If it’s a private sale, being able to get the loan finalised quickly could mean you avoid any awkward and potentially risky arrangements.

Like needing to pay a deposit to secure the sale while you make your finance application from scratch and wait for it to be processed.

Are there any downsides to car loan pre-approval?

If you’re considering pre-approval, you should know about the potential downsides too.

It’s time limited

As soon as you get pre-approval from a lender, the clock is ticking.

Your pre-approval will include an expiry date (plus the other loan terms and conditions).

If you don’t find a car to buy and apply for full approval in time, you’ll need to start again.

It’s not a guarantee of approval

If your circumstances change or the lender is not prepared to accept the vehicle you plan to buy as security for the loan, your application could still be declined.

Not all lenders offer pre-approval

You may also find that seeking pre-approval limits your options.

Only some lenders offer car loan pre-approval so you may miss out on other options if you decide that getting pre-approval is the best option for you overall.

Car loan pre-approval FAQ

Lenders will typically do a credit check when assessing your application for car finance.

Some will do this at the pre-approval stage and this will be recorded on your credit report.

This can affect your credit score in the short term.

To limit any impact on your credit score, it’s a good idea to only apply with one lender (this is why comparing multiple lenders before you apply is so important).

Also consider checking your credit score yourself before you shoot off a car loan application.

If you discover it needs work, you might need to consider a bad credit car loan or you can take steps to improve it before you apply for finance.

This will depend on the lender you apply with, but it’s generally somewhere between 30 days and 90 days.

Yes, lenders that offer pre-approval will usually do so on all of their loan options, including those with and without a car loan balloon payment option.

Provided the car is under the lender’s cut off age (usually under 15 years but can be lower with some lenders), you should be able to purchase a used car using a pre-approved secured car loan.

Written by

Shaun McGowan founder

Loans Expert

Shaun McGowan

Reviewed by

Sean Callery Editor


Sean Callery