Pre Approved Car Loans Pros and Cons

A pre-approved car loan has pros and cons associated with it, similar to any other loan on the market. Shop around for the best rates and terms before signing on the dotted line.


Save time

No matter how you cut it, walking into a dealership with a blank check saves a lot of time in the finance department. Simply select the right car and drive away the same day.

No surprises

Most buyers complain about various financing surprises when obtaining a loan from the dealer. In addition, there is the added pressure to take up sells for added warranties and care packages that can drastically change the loan amount and terms—often resulting in a consumer spending more than they care to at the dealer.

Insurance standards

Most blank check auto loans do not have the same stringent insurance standards as dealer loans may. Since blank check loans are typically smaller amounts consumers do not need to carry expensive collision and comprehensive coverage, giving more flexibility for the customer to chose her payment and terms.

Upfront terms

Having a pre-approved car loan means that the consumer selects the terms. She knows details about the details of the loan upfront; most importantly the interest rate and loan terms. Since purchasing a car is nerve-wracking enough for most consumers, knowing the loan terms up front puts the consumer in the driver’s seat (in more than a literal sense).


No access to special financing

Say what you will about dealer financing, but there are times that rates and terms offered from dealerships are attractive to suitably qualified borrowers. Some dealers offer as little as zero percent interest for 60 months, which is not something pre-approved lenders will match; making the dealer a better option for a loan.


When it comes to pre-approved loans, the consumer will have more paperwork in comparison to obtaining a loan from the dealer.

Smaller loans

If a consumer is looking to make a large purchase on a car (over $20,000) a pre-approved loan is not likely to provide the same attractive rates and terms that a dealer can. Thus, when using pre-approved services, a smaller budget is essential.

Before heading down to the car dealership, it is best to see your credit score. Consumers can get a free copy of all three credit reports at and a free credit score from

Borrowers with a credit score eclipsing 700 are “highly qualified” and might be better suited obtaining a loan from the dealership. In addition, we live in a technology centric world; many dealerships offer a pre-approval section on their websites, giving the opportunity to have the best of both worlds.

With with all of this good news, a word of caution: the more your credit report is pulled within a 90-day time frame, the lower your rating dips. Shop online to find the dealer and inventory with the best selection. Complete the financing application with no more than three banks or dealers, no matter where you get your financing.  The best advice to compare pros and cons it to compare a blank check loan to dealer financing before signing off on the paperwork to get the best possible deal.