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Can you be denied a car loan after pre-approval?
I'm looking into buying a car for the first time and am getting pre-approved. I was pretty confident, but then a friend said they still got denied after getting pre-approved. Can you be denied a car loan after pre-approval?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You can be denied a car loan after pre-approval. It is rare, but it can happen for several reasons, such as fine print, application errors, yo-yo financing, or multi-lenders.
Fine print: In the excitement of getting a new car and having the paperwork in your hands, you may skip over reading everything. Always check the fine print because sometimes financiers may give themselves a window to change their minds. It is generally around 30 days.
Application errors: When filling out the paperwork, double-check everything carefully and read it over aloud if you can. You tend to catch more errors that way. If you find an error and have already submitted the paperwork, contact your lender ASAP to try and fix it. Otherwise, the lender may use the mistake as grounds to cancel the pre-approved loan.
Yo-yo financing: This is a scam where dealerships will let you take the car home before financing is even complete. Then, they’ll call you back to tell you the financing fell through. This leads to you having to return to the dealership to re-negotiate. And often, you’ll find the new offer includes a higher interest rate than you originally agreed upon.
Multi-lenders: In some cases, especially with dealerships, they may apply for multiple lenders on your behalf. In this case, all the lenders must contact you and say whether they approve or not. So, you may get a yes initially and a no later because you’re speaking with different lenders.
To avoid many of these cases, take the time to read over the agreement before buying the car and wait until the ink is dry on the paperwork before taking the keys and driving home.
If you don’t like the agreement you ended up with, you can always
refinance
your loan down the line.Refinance quickly and easily through the
Jerry
app. On average, those who refinance pay $85 less every month.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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