How to Know That Your Car Loan Application Will Be Approved

This article will give you an idea if your car loan application is likely to get approved. 

Our team has helped clients secure over 500 car loans in the past six months alone, just by fixing their credit scores. That’s nearly 100 approvals each month. 

Plus, we've maintained a 90% success rate for approvals, helping our clients drive away in their dream cars.

And, most importantly: this process has allowed us to help more people secure financing and buy their vehicles faster than ever before.

You’re about to learn precisely how you can know if your car loan application will get the green light.

How To Increase Your Car Loan Approval Chances

Did you know that nearly 30% of car loan applications get denied because people didn’t prepare properly? Yep, it’s true. 

Many applicants miss out on crucial steps that could have boosted their chances.

Before we dive into the signs of car loan approval, let’s talk about what you can do to stack the odds in your favor before even hitting that apply button.

#1: Check Your Credit Score

Your credit score is the most important factor that lenders consider when reviewing car loan applications.

Lenders see your credit score as a snapshot of how well you handle debt. A high credit score (typically 700 or above) is a green flag. It signals to lenders that you’re responsible with credit, making it more likely your application will be approved. 

On the other hand, if your score is below 600, it’s a red flag. But don’t worry! Even with a low credit score, you still have options like subprime lenders, though your interest rates may be higher.

So, if you’re wondering whether your car loan will get approved, the first step is to check that credit score. 

Remember: Understanding your credit report should be a priority before making any financial move.

#2: Review Your Debt-to-Income Ratio (DTI)

Your debt-to-income ratio (DTI) is another big factor lenders use to assess your loan application. DTI is a simple calculation: take the total amount you spend on debt each month and divide it by your monthly income.

For example, if you spend $1,000 a month on debt and make $4,000 a month, your DTI is 25%.

Most lenders want to see a DTI below 40%. If you’re in that range or below, you’re in a good spot for approval. 

But if your DTI is higher than 40%, that’s a red flag, and you may need to lower your debt before applying.

#3: Look at Your Employment History

Another key factor lenders check is your employment history. 

Lenders want to see that you’ve had stable employment for at least the last two years. This gives them confidence that you’ll continue to earn enough income to make your car payments.

If you’ve had the same job or steady employment, that’s a strong sign your car loan application will be approved.

However, if you’ve had recent gaps in employment, or switched jobs frequently, lenders may view this as a risk. 

In that case, it may be a good idea to wait until you’ve had stable employment for at least six months before applying.

#4: Ensure You Have a Solid Down Payment

While some lenders offer zero-down-payment car loans, having a down payment ready can significantly increase your chances of approval.

Why? 

A solid down payment shows lenders that you’re financially responsible and willing to invest in the vehicle. 

It also reduces the loan amount, making it less risky for lenders.

If you can afford it, aim to put down at least 10-20% of the car’s price. That’s another positive signal that can push your loan application over the finish line.

#5: Get Pre-Approved

One of the best ways to know if your car loan application will be approved is to get pre-approved. 

Pre-approval is when a lender reviews your financial details and gives you an estimate of how much they’re willing to lend you.

Not only does this give you confidence when shopping for a car, but it also signals to dealers that you’re a serious buyer. Plus, getting pre-approved allows you to compare offers from different lenders and choose the best deal.

Pro Tip: Pre-approval doesn’t guarantee final approval, but it’s a strong indication that your car loan will go through.

#6: Avoid New Credit Applications

Applying for new credit—whether it’s a credit card, loan, or store financing—right before you apply for a car loan can hurt your chances of approval.

Every time you apply for credit, the lender performs a “hard inquiry” on your credit report. This can temporarily lower your credit score and make lenders hesitant to approve your car loan.

If you’re planning to apply for a car loan soon, avoid any new credit applications for at least three to six months.

#7: Choose the Right Lender for Your Situation

Not all lenders are the same. Some specialize in helping people with low credit scores, while others focus on borrowers with higher credit ratings.

If you have a great credit score, you’ll have more options, and likely access to better interest rates. 

But if your credit is less than stellar, look for lenders that specialize in subprime auto loans.

The key is to find the lender that’s the right fit for your financial situation. 

Doing so will increase your chances of getting approved, even if your credit score or income is lower than ideal.

#8: Provide All Required Documentation

Lenders need specific documents to process your car loan application, including proof of income, employment, identity, and residency.

The more organized and thorough you are with your paperwork, the smoother the process will go. Missing or incomplete documents can delay approval or cause your application to be denied.

Double-check that you have all the necessary documents ready before submitting your application to avoid any hiccups.

#9: Pay Off Smaller Debts

If you’re close to paying off a credit card or other small loan, do it before applying for a car loan.

Why? 

Paying off debt lowers your DTI ratio, improves your credit score, and shows lenders that you’re actively managing your financial responsibilities. 

All of these are strong signals that your car loan will be approved.

On the other hand, a missed loan or credit card payment will cause your credit score to drop. This will hurt your credit score and can be a reason why your loan application might be denied.

#10: Monitor Your Credit Report for Errors

Did you know that errors on your credit report can lower your score and hurt your chances of getting approved for a car loan?

Before you apply, take the time to review your credit report. 

Look for any inaccuracies—like late payments that weren’t actually late, or accounts that don’t belong to you—and dispute them with the credit bureaus.

Correcting errors can give your credit score a quick boost, increasing your chances of approval.

Signs That Your Car Loan Application Is Likely to Get Approved

Getting a car loan can feel like a stressful waiting game. But there are a few telltale signs that things are moving in the right direction. 

Watch out for these signs.

1. Pre-Approval Confirmation

One of the first and most obvious signs of car loan approval is getting pre-approved. If a lender provides a pre-approval, it means you’ve already passed the initial credit and financial checks. This step puts you in a strong position to negotiate with the dealership and often speeds up the final loan process.

2. Positive Credit Check

After a lender checks your credit score and you hear nothing about issues, it’s usually a good sign. Lenders will check your credit history to evaluate your risk as a borrower. A smooth credit check process is one of the clearest signs of car loan approval.

3. Request for Additional Documentation

When a lender asks for more information—like your proof of income, tax returns, or employment verification—it’s often a sign they’re moving forward with the loan. 

In many cases, they're just double-checking details before granting final approval.

4. Verbal Assurance from Lender

A verbal confirmation or positive feedback from your loan officer can be a big indicator that your loan is about to be approved. If they’re confident enough to tell you that things are looking good, it usually means you’re on the right track.

“When I applied for my first car loan, the lender said they ‘just needed a couple more documents’—that was a huge relief. It gave me confidence that I was close to the finish line,” shares long-time car buyer Alex H.

5. Notification of Loan Terms

If you start receiving information about the terms of your loan—such as the interest rate, monthly payments, or length of the loan—that’s a very good sign. This usually means the lender has made a final decision and is preparing the loan agreement.

Car Loan Application and Credit Scores FAQ

If you’re still on the fence about whether your car loan application will get the green light, don't worry—I’ve got you covered. 

Below are answers to some of the most common questions people ask before hitting 'submit' on their loan application.

1. What’s the average credit score to get approved for a car loan?

Generally, most lenders look for a credit score of 660 or higher to approve a car loan. 

But don’t stress if you’re slightly below that—some lenders offer loans to people with lower scores. Though you might face higher interest rates. 

Keep an eye on your credit score before applying so you know where you stand!

2. Can I get a car loan approved with a 600 credit score?

Absolutely! While a 600 credit score may not get you the best interest rate, many lenders still approve car loans in this range.

In fact, some even specialize in working with people who have less-than-perfect credit. You might just need a larger down payment or be prepared for higher monthly payments.

3. What if I don’t have a steady income but have an 800 credit score? Can I still be approved?

Having an 800 credit score is definitely impressive. It shows lenders you’re responsible with credit. But without a steady income, it could be tough to get approved. 

Lenders need to know you have the ability to repay the loan, so showing proof of stable income is crucial.

If your income isn’t steady, consider adding a co-signer or exploring alternative loan options.

Wrapping Up

While there’s no guaranteed way to know if your car loan application will be approved, these signs of car loan approval can help you gauge where you stand in the process. 

To recap, check your credit score, DTI, and employment history. Ensure you have a solid down payment, avoid new credit applications, and choose the right lender. Lastly, provide all required documents and monitor your credit report for errors.

By the way, if your credit score isn't quite where it needs to be, Disputely can help you clean up your credit report and potentially boost your score. 

Their easy-to-use credit repair software is perfect for finding and disputing errors that could be hurting your chances of approval.

By following these tips, you’ll be in the best possible position to get approved for your car loan.