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How applying for multiple car loans affects your credit

Find out whether shopping around for the best deal will cause your score to drop.

Shopping around before committing to a car loan is always a good idea. But this doesn’t mean you should apply for every loan offer you see. Every time you apply for a car loan, the lender does a hard credit pull. Though how this affects your credit varies depending on the different credit scoring models.

When will shopping around for a car loan affect my credit score?

In general, submitting your personal and financial details as part of a loan application will result in a hard inquiry and a mark on your credit report. A car loan provider uses that personal information, including your name and driver’s license number, to look at your credit report and list the inquiry. Car loan quotes and preapprovals usually only use a soft credit pull — which doesn’t affect your credit — though you should check with the lender to make sure.

Multiple hard inquiries listed on your credit report in a short span of time could negatively affect your credit score. However, some credit scoring models will allow for some level of shopping around when it comes to car loans. This means that instead of listing each car loan application as a separate inquiry on your credit report, it will group all of the applications into one hard inquiry. How long you have to rate shop depends on the credit scoring model and can vary between 14 and 45 days.

What’s the difference between a soft and hard credit inquiry?

A soft credit inquiry is typically used for preapprovals and doesn’t affect your credit score. It gives creditors a surface-level look at your credit, without digging in to your payment history or credit use.

On the other hand, a hard credit inquiry is usually used with most loan and credit card applications. Each hard credit pull typically drops your score five or so points, though it can vary.

How many inquiries is too many?

There’s no one number that is “too many,” but generally, one credit inquiry every three to six months is not considered to be risky behavior by lenders and shouldn’t affect your credit score too much. Multiple factors determine how many inquiries will affect your score, such as the length of your credit history and how many accounts you have. Keep in mind, hard credit inquiries remain on your credit report for two years.

What happens if I don’t get approved when I apply for a car loan?

You might want to consider waiting a few months to apply with another lender. This will give you time to strengthen your application, whether that means improving your credit score, coming up with a larger down payment or paying off some of your current debts.

If you’re in a position where you need to make a car purchase quickly, consider calling the lender to explain your situation and finding out whether or not your recent rejections will be an issue. You can also consider using an online car loan broker, which can help you find lenders you might qualify with by filling out one online form.

How do I check my credit report and credit score?

There are multiple providers that you can obtain your credit score from. Every year, you can get free credit reports from the three major credit bureaus: Equifax, Experian and TransUnion. And some credit card providers, including Chase and Discover, provide a free credit score on your monthly billing statement.

Compare car loans before applying

Name Product Filter Values Minimum credit score APR Loan term Requirements
PenFed Auto Loans
Starting at 1.79%
3 to 7 years
Active membership with PenFed
Low APR car loans from a well-known credit union.
No minimum credit score
3.9% to 27.9%
18+ years old, annual income of $4,000+, no active bankruptcies
Get pre-qualified for used car financing and receive competitive, personalized rates. Car Loans
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
CarsDirect auto loans
No minimum credit score
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
Auto Credit Express Car Loans
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.
Monevo Auto Loans
3.99% to 35.99%
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit.
Good to excellent credit
Starting at 0.99%
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out. Car Loans
Starting at 1.89%
550+ credit score, no open bankruptcies, $24,000+ annual income, US citizen or permanent resident, 18+ years old
Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.

Compare up to 4 providers

Can I apply for a car loan if I have a bad credit history?

Yes, there are some car loan providers that work specifically with poor-credit applicants. Before you begin your search, you should build up a small deposit and examine your budget to figure out how much you can reasonably afford to pay each month. Then begin to research and compare the different lenders who specialize in high-risk car loans.

Depending on how bad your credit history is, it may also be worth getting in touch with your current bank to see if it would be willing to consider your application. Make sure to contact your bank before submitting an application.

Bottom line

It’s possible to shop around for a car loan without it having a huge affect on your credit score. But it all depends on the credit scoring model and whether it groups your multiple credit inquiries into one. You can learn more about how credit scores work in our guide, or visit our guide to car loans to compare options.

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