Are car loans hard inquiries

## Car Loans: Hard Inquiries vs. Soft Inquiries

When you apply for a car loan, the lender will typically check your credit report to assess your creditworthiness. This process is known as a credit inquiry. There are two types of credit inquiries: hard inquiries and soft inquiries.

### Hard Inquiries

A hard inquiry is a credit inquiry that is recorded on your credit report and can stay there for up to two years. Hard inquiries can lower your credit score by a few points, especially if you have multiple hard inquiries in a short period of time.

Lenders use hard inquiries to determine whether or not you are a good credit risk. When you apply for a loan, the lender will check your credit report to see if you have any recent hard inquiries. If you have too many hard inquiries, the lender may be less likely to approve your loan application or may offer you a higher interest rate.

### Soft Inquiries

A soft inquiry is a credit inquiry that is not recorded on your credit report and does not affect your credit score. Lenders use soft inquiries to check your creditworthiness for pre-approved offers or to evaluate your eligibility for certain types of loans.

Soft inquiries are typically used by credit card companies and other lenders to send you marketing offers. Soft inquiries can also be used by employers to check your creditworthiness before making a hiring decision.

### How to Avoid Hard Inquiries

If you are concerned about the impact of hard inquiries on your credit score, there are a few things you can do to avoid them:

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* **Shop around for car loans before you apply.** Compare interest rates and terms from multiple lenders to find the best loan for you. This will help you avoid applying for multiple loans and triggering multiple hard inquiries.
* **Get pre-approved for a car loan.** When you get pre-approved for a car loan, the lender will do a soft inquiry on your credit report. This will give you an idea of the interest rate and loan terms you can qualify for without affecting your credit score.
* **Be careful about who you authorize to pull your credit report.** Only authorize lenders that you are serious about getting a loan from.

### Conclusion

Hard inquiries can have a small impact on your credit score, but they should not prevent you from getting a car loan. If you are concerned about the impact of hard inquiries, you can take steps to avoid them.

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