How can I shop around for the best car loan?

[Loren]

I’m thinking of buying a new car, so naturally I want to get the best terms on the loan. However, I understand that each company I apply to checks my credit report and puts a credit inquiry on my report. So the more I check, the more points my credit score will drop? How can I get a decent loan?

[Tracy Winters]

You can do your rate shopping safely

Fair Isaac, the developer of Fico credit score recognizes the importance of rate shopping, and the need to be able to shop for better terms without fearing of the consequences it may have on your credit.

So they have come with a set of rules that allow you to shop for rates with ease:

• Your current Fico score doesn’t consider inquiries made in the previous 30 days.
  This means that any inquiries made during the time you shop for rates will not have any effect on your score.
• All inquiries for Mortgage, Student or Auto loans made in a defined period of time count as just one inquiry.
  This insures that even after you finish shopping for the best loan you can get, it will have minimal effect on your credit score.

  In the old version of Fico, that time period was 14 days. The new version allows for a 30 days rate-shopping period.

See rate-shopping-and-credit-scores.html for more information.

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