Buying a car with cash is a pipe dream for many. In fact, traditionally some 35 percent of used cars, and more than 80 percent of new cars, are financed with loans, according to J.D. Power & Associates. Depending on the vehicle, most loans are between 24 and 84 months. Because loan terms and interest rates can make a significant difference in your monthly payment, it makes sense to shop around for the best deal.

Inquiries Count

Unfortunately, you can’t get pre-approved for a car loan without affecting your credit score, at least a little bit. Each time you apply for a loan, a “hard” inquiry is sent to the major credit bureaus — and your credit score is lowered five to 10 points. That means if you apply for a loan at a handful of banks or credit unions, your score could drop 50 points — reductions that last about a year. Since higher credit scores typically mean a lower interest rate, you could be hurting yourself simply by seeking out the choicest offer.

One and Done

To avoid additional finance charges on a car loan, do one-stop shopping. When you apply for an auto loan through Finance With KSL Confidence, several lenders are canvassed for you all at once. Credit bureaus such as Experian and Equifax treat auto loan requests made within a certain period — usually 14-30 days — as one incident. Thus, with Finance, you can find the best rate without having multiple dings on your credit report.

How Applying for a Car Loan Affects Credit Score

Quickly Apply

With Finance, one application gives you access to multiple lenders. Instead of spending hours filling out individual loan applications — and trying to decipher and compare all the fine print — you can quickly apply online in less than 5 minutes. We’ve partnered with DealFi to work with local credit unions and other auto lenders to find your most ideal option.

Personal Checkup

To get a better idea of what terms and rates you might qualify for, you can check your own credit report. The major credit bureaus will provide your FICO score upon request, free of charge, as will many credit card companies. This “soft” inquiry does not affect your credit score. Your FICO score is determined by the length of your credit history and how consistently you’ve paid your loans and credit card bills on time.

Improve Your Score

How do car loans affect your credit score? The good news is that once you’ve secured a loan, you can start improving your numbers. Every time you make your auto loan payment by the due date, your score is positively impacted. That better FICO should lead to a better interest rate for future loans, be it for a vehicle or a home.

How Applying for a Car Loan Affects Credit Score

Have It All

Ready to start shopping? Get pre-approved for an auto loan using Finance With KSL Confidence. Then find your perfect match on KSL Cars, where you can narrow your search based on the price, year, model and mileage.

KSL Confidence is rolling out in stages. Protect and Finance are available exclusively in Utah County at this time, but will be available in other geographic regions soon.