Do not buy a car without shopping for a quote.

Will getting a quote on an auto loan ding your credit score? Many people worry about this when looking at financing, and therfore only look at one bank or just take the first loan they find. But that is not the best way to handle it, and in fact may hurt your score more in the long run.

Auto Loan Quotes And Credit

First, it is worth understanding why this myth got started in the first place. There is a kernel of truth to it; if a credit bureau sees a large number of credit checks within a short period of time, it might negatively affect your credit score. As a general rule, people who are getting a lot of credit checks at once are seen as either high risk credit users or those who are being investigated by multiple agencies for creditworthiness. Either category makes creditors a bit uneasy about extending credit.

So, why doesn’t getting a quote for an auto loan affect your credit score the same way? The short answer is that credit bureaus take into account who is asking and why. If multiple auto loan agencies are checking your credit within a few days of each other, the credit bureau generally knows that this is simple paperwork, not a bad sign, and will consider it accordingly. And credit bureaus realize you have abundant reasons to shop around for the best car loan rates.

Why Shop For Auto Financing?

Some consumers believe, especially if they have credit problems, that no matter where they go, they will get the same results. But that is not true for a number of reasons. First of all, each financial institution weighs different factors in different ways. While your credit score will be a factor no matter where you go, different companies interpret scores in their own way, using a custom formula. So two people with the same financial data on paper may get wildly different results from two different banks.

Before you take the keys, get the right loan.

Secondly, it is always worth shopping around. Remember that an auto loan is a product, just like the cereal on your shelf or the clothes in your drawer. Different financial products might suit you better, even if the details are similar on paper. Even something as simple as determining you can get the best deal from the bank you trust in the first place is worth the research.

Finally, it can cost you a lot more to get a bad loan. High interest rates, the price you pay for the loan, can cost you thousands of dollars over the life of the loan. To protect your credit, shopping around is the smart financial move. But you do need to follow a simple rule.

The Rule Of Auto Loan Shopping

That rule is simple: Gather your auto loan quotes within a few days. While credit bureaus will generally view requests “close together” as the same request, credit bureaus vary widely on what “close together” is, anywhere from fourteen to forty-five days. So, do not risk a ding to your score. Get your data together, pick out the banks in which you are most interested, and move quickly. If you need help learning about the best car for you, find more research from CarFoundMe.