How to Get A Pre-Approved Car Loan?

Buying a car is an exciting venture, but the financial aspect can sometimes be daunting. Securing a car loan pre-approval can simplify the process and give you the confidence to make informed decisions while shopping for your dream car. 

A pre-approved car loan is like getting a head start on buying a car. Before you even visit a dealership, a bank or lender reviews your financial information and decides how much money they’re willing to lend you for a car. 

Car loan pre-approval is based on factors like your income, credit score, and debt. It gives you a clear idea of your budget, making it easier to shop for a car within your financial limits. Once you find the car you want, the pre-approved loan can help speed up the buying process because you already know how much you can borrow. Let us learn about the step-by-step process of acquiring a car loan pre-approval:

1. Understand the Benefits of Pre-approval

Getting pre-approved for a car loan offers several advantages. It gives you a clear understanding of your budget, streamlines the buying process, and puts you in a stronger negotiation position with dealers. Additionally, pre-approval can lead to quicker financing approval once you’ve found the right car. 

Here are some of he most prominent advantages of getting pre-approved for a car loan:

  • Clear Budget: Pre-approval provides you with a clear understanding of how much you can afford to spend on a car.
  • Time Savings: Pre-approval streamlines the financing process, reducing the time spent on paperwork and approvals when you find the right car.
  • Interest Rate Security: Lock in a specific interest rate with pre-approval, protecting yourself from potential interest rate increases before finalising the loan.
  • Better Loan Terms: Pre-approval allows you to shop around for the best loan terms and interest rates before committing to a specific lender.
  • Transparent Process: Pre-approval provides you with a transparent view of your loan terms and monthly payments, ensuring no surprises down the road.
  • No-Obligation Option: Pre-approval doesn’t require you to commit to a loan; you can still choose not to proceed with the loan after pre-approval.

2. Check Your Credit Score

Your credit score plays a significant role in obtaining favorable loan terms. Check your credit score before applying for pre-approval. A higher credit score can lead to lower interest rates and better loan offers.

CIBIL Score Range Credit Profile Car Loan Eligibility
300 - 599
Poor or No Credit History
Limited or No Access to Car Loans
600 - 699
Limited Options with Higher Interest Rates
700 - 749
Access to Car Loans with Reasonable Terms
750 - 900
Strong Eligibility with Favorable Terms

3. Assess Your Finances

Determine how much you can comfortably afford for a car by assessing your monthly income, expenses, and existing financial commitments. Aim for a car loan that fits within 15% to 20% of your monthly income to ensure you don’t strain your budget.

For example, if your salary is Rs. 1 lakh per month, you can assume that you will be able to pay Rs. 20,000 per month towards your car loan. Therefore, if you intend to accept a car loan tenure of 7 years, you can calculate your car loan affordability as follows:

  • Rs. 20,000* 12* 7 = Rs. 16,80,000

Accordingly, it would be ideal to take a loan of around Rs. 16,00,000 to be able to pay it off in time without any hassle. You can also select your car to purchase on this basis.

Alternatively, you can use an online car loan calculator to determine the car loan terms you would like:

4. Gather Documentation

Lenders require specific documentation for pre-approval. Typically, you’ll need to prepare the following documents in advance to expedite the process:

  • Identity proof (such as a passport or Aadhaar card)
  • Proof of residence (such as a utility bill or bank statement)
  • Proof of income (such as a salary slip or tax return)
  • Driving licence
  • Bank statement for the last 6 months

5. Contact Lenders

Get in touch with the car loan provider that is offering pre-approved car loan rates that are favorable to you. You can contact your preferred car loan provider through any of the following means:

-Visiting lender’s official website

-Contacting the lender via mail

-Reaching out to customer service

6. Start the Pre-Approval Process

You can now initiate the pre-approval process. This may involve filling out an online application or visiting the car loan provider’s local branch. Provide accurate and complete information to ensure an accurate assessment. Complete the pre-approval application, including details about the loan amount you’re seeking and your preferred repayment term. The lender will use this information to determine and check your eligibility.

7. Await the Decision

After submitting your application, the lender will review your information and credit history to make a decision. This usually takes a short amount of time, often within a few business days.

8. Review the Pre-approval Offer

Once you receive the pre-approval offer, carefully review the terms. Take note of the loan amount, interest rate, repayment term, and any associated fees. Ensure that the offer aligns with your financial goals.

9. Visit Dealerships

Armed with your pre-approval offer, visit car dealerships with confidence. You now have a clear budget and can focus on finding a car that fits within your pre-approved loan amount.

10. Finalise the Loan

Once you’ve found the right car, inform the dealer about your pre-approved loan. They will work with the lender to finalise the loan terms and complete the necessary paperwork.


Getting pre-approved for a car loan is a proactive step that empowers you as a buyer. It not only simplifies the financing process but also ensures you have a clear budget when shopping for a car. By following these steps and making informed decisions, you’ll be well-prepared to find the perfect car that fits your needs and your financial capabilities. Remember, the road to car ownership becomes smoother and more enjoyable when you start with a pre-approved car loan in hand.

Amit Arora


I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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