How will shopping for an auto loan affect my credit?
Shopping for the best deal on an auto loan will generally have little to no impact on your credit score(s). The benefit of shopping will far outweigh any impact on your credit.
In some cases, applying for multiple loans over a long period of time can impact your credit score(s). Lenders can make requests, also known as inquiries, to access your credit files from the consumer credit reporting companies. These requests will generally only count as a single inquiry if they’re made within 14 to 45 days of each other. Shopping for two different types of loans, such as a mortgage loan and an auto loan, will count as two separate credit inquiries.
To get the best deal and minimize any negative impact on your credit:
- Check your credit scores and reports – One of the most important first steps is to check your reports for any errors or inaccuracies that might be impacting your scores. If you find errors, you want to dispute that information in order to have it removed.
- Shop around with multiple lenders before shopping for a vehicle – Get preapprovals with different lenders before going to a dealer. This helps you compare offers and loan terms to get the best deal and could save hundreds or even thousands of dollars over the life of your loan.
- Limit your loan shopping to 14-45 days – Keeping your shopping within this time span generally means that any requests from lenders to check your credit will count as one credit inquiry.
Know before you shop for a car or auto loan
By asking questions before you shop, you’re more likely to get the best interest rates and loan terms for your budget. Plus, you’ll save time, money, and reduce stress.