A car loan pre-approval is when a lender decides you're eligible for a car loan even before you've purchased a car. When a lender decides you're in the clear to receive a loan, they give you what is called conditional approval, which is basically approval for a specified loan amount. The estimated amount is based on things like your credit score and your overall financial situation.
When you're set on the exact car you want to purchase, you have to go back to your lender and get unconditional approval, which means that they'll give you the loan amount you need.
A car loan pre-approval is beneficial because it gives you a set of guidelines when shopping for a new car. You enter the new or used car dealership with a budget in mind, and you can revert back to this budget when car dealers get pushy about low interest rate promos, add-ons, and other bonuses that might cost you more in the long run.
