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How do I shop for a car loan without damaging my credit?
I want to shop for a car loan, but I don't want it to make an impact on my credit because of some other purchases I might make. Is there any way I can compare car loan rates without it affecting my credit score?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Great question! The one surefire way of shopping for a
car loan
without hurting your credit is to get prequalified for a loan.Unlike preapproval, prequalification conducts a soft inquiry on your credit, which won’t cause any harm or drop in your credit score. Plus, you still get the added benefits that only prequalification can bring, such as:
- Getting an idea of how much you can borrow
- Budgeting
- Negotiating power with the dealer
- Focusing on what car you want rather than the negotiating surrounding it
Don’t confuse prequalification with preapproval, which can actually make a five to 10 point hit on your credit score. Once you’ve picked out a car, you can go back to your lender for preapproval with minimal damage to your credit score. Keep in mind that most prequalification and preapproval agreements only last for about 30 days, so act quickly.
While you’re shopping around for cars, you may also want to think about car insurance. Pop your vehicle information and the type of coverage you need into the
Jerry
app, compare quotes, and you’ll get the best rate for your new or used car without all the hassle of shopping around in multiple places.Best of luck with your loan!
View full answer
- Gregory R.
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