Yes, a loan can be denied after approval, but it rarely happens. It’s more common for a loan to be denied after preapproval, which is a preliminary process that you can use to estimate how much you can borrow and what rates you may qualify for. Preapproval doesn’t guarantee that you’ll be approved for a loan, and it’s possible for your financial situation to change after being preapproved.
Loans that have a lengthier application and approval process, such as mortgages, are most likely to be subject to denial even after being approved because there’s more time for things to change before the loan is finalized. Another type of loan that can be denied after “approval” is an auto loan. It’s possible that the dealership could let a customer drive off the lot with a car before their loan is finalized. If the dealership can’t secure the loan, they may ask the customer to bring the vehicle back to the dealership.
Keep in mind that being denied for a loan after approval is a rare occurrence. As long as the information on your loan application is accurate and your financial situation doesn’t change for the worse during the approval process, you should be in the clear.
This answer was first published on 01/30/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
