Loan, mortgage and credit preapprovals are not a guarantee of rates, terms or a firm offer, but they are an indication that a preliminary review considers you qualified to secure financing.
The reason that preapprovals are considered tentative is that they are based on assumptions made by collecting unverified data and conducting a soft credit inquiry. It’s not until a borrower officially applies for a loan or credit that they submit verifications and the lender performs a hard credit inquiry. At that point, the borrower could still be declined or offered alternative terms and amounts.
How long a preapproval lasts for certain products
Preapprovals don’t stay valid forever. Too many changes can happen over time to impact the terms, including changes in interest rates, your credit, your debt-to-income level and the value of any property on which you want to get a loan. As a result, when you get a preapproval, it will come with a time limit that’s set by the lender.
Some general guidelines for preapproval timelines:
How Long Preapproval Lasts
|Credit card||Varies (may be given a deadline date)|
|Auto loan||30 days|
A preapproval gives a set of terms to a borrower based on their eligibility at the time the offer is made. This introduces some level of risk since a borrower’s eligibility can change quickly. To combat this risk, lenders set deadlines for requiring a recheck of eligibility, which is why we see variances in the length of time for how long preapprovals last.
What do you do with a preapproval?
Preapprovals are more than just ways to compare rates and ease your mind that you will likely get the credit or loan for which you’re seeking.
They may also lock in favorable rates, give you some leverage in negotiations and protect your credit score since a hard credit check won’t take place until you’ve decided to apply formally. And just as a lender isn’t locked in by the preapproval, the borrower isn’t either. Consumers can still choose different offers or reduce the amount of money they ultimately borrow.
One of the greatest benefits of getting preapproval for a credit card is that it allows you to measure your likelihood of approval without applying and having a hard credit inquiry hit your credit report. With a preapproval and a soft credit pull, you can explore the odds of getting approved by comparing various interest rates and cardmember benefits.
It’s not unusual to receive unsolicited credit card preapprovals. These are required to follow standards in the Fair Credit Reporting Act and can contain introductory and balance transfer offers that hold competitive advantages. Consumers who don’t want these unsolicited offers can opt out by visiting OptOutPrescreen.com.
A house is a significant investment. It is often the largest purchase a consumer will make in their lifetime.
The high debt load and long-term payment plan make it vital that borrowers use a mortgage preapproval to compare rates and terms with various lenders before selecting one. With a preapproval, which is more in-depth than a prequalification, you learn exactly how much you can borrow. You’ll learn how much you’d be approved to borrow — and, in turn, how that will impact your budget. This helps you narrow the field when shopping for a home and has the potential to lock in a rate for a limited period.
Also, you can gain some leverage when shopping for a property while you have a preapproval. The letter you receive when you’re preapproved can be used to show serious intent when you bid, and it can also help you close faster when you find that perfect home.
Unsecured personal loans are available through many banks, credit unions and other financial institutions, but there are a lot of different terms, rates and fees potentially attached to them depending on the lender.
Further complicating matters, these terms can vary based on your credit score, debt and income, so a straight comparison of several different lenders might not give you enough information. Instead, getting preapprovals from multiple lenders can show you what your rates, terms and fees might be — and it won’t hurt your credit.
With an auto loan preapproval, you go to a dealership ready to negotiate the price of the car. You’ll have a firm grasp on how much car you could afford and how it will impact your budget.
Some dealerships may even be more likely to negotiate on price and financing deals when you walk in with a preapproval. That said, by getting preapproved for an auto loan, you may get a lower interest rate offer through the dealer.
The bottom line
Preapprovals offer many valuable advantages to consumers, including the peace of mind that comes with knowing you’re likely to get approved for the credit you need. But preapprovals don’t last forever, and letting them expire can mean having good offers taken off the table.
Interested in a personal loan?Here are the top personal loan lenders of 2019!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|5.74% – 16.99%1||$5,000 - $100,000|
|7.54% – 35.99%||$1,000 - $50,000|
|7.99% – 35.89%*||$1,000 - $50,000|
|5.99% – 24.99%2||$5,000 - $35,000|
|5.99% – 29.99%3||$7,500 - $40,000|
|6.79% – 20.89%4||$5,000 - $50,000|
|9.99% – 35.99%5||$2,000 - $25,000|
|6.95% – 35.89%6||$1,000 - $40,000|
|6.99% – 18.24%7||$5,000 - $75,000|
|9.95% – 35.99%8||$2,000 - $35,000|