Can You Decline an Approved Car Loan?

Just because you get approved for a car loan doesn’t mean you have to accept it.
Dawnielle Robinson-Walker
By Dawnielle Robinson-Walker 
Edited by Dawnielle Robinson-Walker

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Can you decline an approved car loan? Absolutely.

If you’ve gone through the necessary steps to apply for an auto loan and been approved, you're not obligated to accept the offer.

Auto experts advise borrowers to seek preapproval with multiple lenders to find the best offer, then use that as a backup at the dealership. You can decline any approval the dealer finds for you as well.

You can walk away for any reason until you've signed a loan agreement.

Reasons to decline a car loan

  • The dealer beats your preapproved offer. Congratulations. That's why it's smart to shop around.

  • The terms aren’t what you expected. A dealership typically has many sources of financing, and approval may require a longer term, higher annual percentage rate or bigger down payment than you were prepared for. By getting a preapproved loan before you shop, you'll have a backup plan to prevent this outcome.

  • The contract includes extras you don’t want. If items such as guaranteed asset protection, an extended warranty or credit protection insurance are bundled into your loan, they could elevate your monthly payment unnecessarily.

  • Change of heart. If you change your mind about the vehicle or find another car at a different dealership, you don’t owe the dealership or lender anything but a courtesy call to say that you’ve changed your mind.

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What happens when you decline an approved car loan?

As long as you haven’t signed a loan agreement or taken possession of the vehicle, you haven’t purchased anything, so you're free to tell the lender and dealership, “Thank you, but no thank you,” and walk away.

If you plan to buy a different car elsewhere, you may have to submit a new loan application if the previous approved car loan had specific terms for a specific vehicle. Your credit will be protected if you apply for all of the loans within a short shopping window.

If you signed a loan application and the vehicle was delivered without a specific lender's approval — “spot deliveries” often occur on nights and weekends when instant approvals aren't available — you may be asked to return to the dealership to sign new paperwork with terms that differ from what was originally discussed. You can return the car and decline this loan as well.

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