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How do car loans affect my credit score?
I'm going to take out a second car loan for a nice sports car, but I'm worried about how it might affect my credit. How does a second car loan impact your credit?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A sports car—what a great way to treat yourself! And I’ve got more good news: in the long-term, a
car loan
can improve your credit score, as long as you continue to make payments on time.However, the short-term doesn’t have as good of an outlook. When you take out a car loan, the lender will check your credit via a hard inquiry. In this regard, you might see your credit score drop between five and 10 points. Take solace in the fact that this is only a temporary hit, and you should recover from this rather quickly if you keep making on-time payments.
Since you’re getting a sports car, you should also budget for full coverage car insurance. Sports cars are notoriously more expensive to insure because of their speed and cost, so you should shop around to find the best rate. The easiest way to do this is with the
Jerry
app—we’ll get you multiple personalized quotes from top providers instantly, so that all you have to do is choose the plan that works best for you.Enjoy your new ride!
View full answer
- Gregory R.
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