Hey there everyone!
This has always confused me, so I'm hoping to get this understood.
When I was at Mazda the other night and they were trying to talk me into allowing them to pull credit, the financial advisor said that when they pull credit and then send it out there, it only counts as one HP on my credit report no matter how many places it gets sent out to. And that would be the case for 30 days.
I feel like I remember this from the past and it being different.
Is there anyone that's able to explain this out better and how it would make an impact on my score. Obviously I know the dealer pulls the credit, so that's a HP and inquiry, but what about when they send it out? I just want to make sure I don't shoot myself in the foot and take my almost 800 score and tank it. (Paranoid much?...YES!) I also don't want to do anything to make any of my cards upset and cut them off. (Chase, I'm looking at you. I love you guys too much!)
Thank you so much for any help here with this, especially in understanding in simplistic terms how this works.
It sounds like you're describing a "shotgun app", where the dealership apps you for an auto loan with multiple lenders to cast a wide net for approval and/or the best deal. In that case, you would take an HP for each lender they try, so what their financial advisor told you would not be technically correct. If those lenders all code their inquiries correctly, however, they will be de-duplicated for scoring purposes, which means that they will affect your score the same as a single inquiry. On version 8, I think the de-dup period is 45 days.
Imo, it's better to do the rate shopping yourself and get a pre-approval from a lender you like before going to the dealerships. You should be able to save yourself both some of the additional HPs and what the dealership adds onto the interest rate.
I appreciate the reply. Thanks!
Yeah, that's what it sounded like and I thought that each one would be a HP and inquiry. I definitely don't want that to happen and want to avoid it.
So, if I may ask, what's the best way to approach this? I already know that neither my bank, nor my CU, will offer the best rate so a preapproval from them won't do much. Let the dealer pull the inquiry and then go from there with who they think will offer the best loan and try that first?
As good as I am with a lot of the car buying process, the financing part always end up biting me in the end.
Thanks for the reply and further elaboration. I think that I'm starting to understand it better now. I know that Mazda is offering both 0% and 2.9%, depending on the length of the loan.
You're the second one to say if they code it correctly. Is there a way to make sure that happens? How often does that not get coded correctly?
@dsotm76 wrote:Thanks for the reply and further elaboration. I think that I'm starting to understand it better now. I know that Mazda is offering both 0% and 2.9%, depending on the length of the loan.
You're the second one to say if they code it correctly. Is there a way to make sure that happens? How often does that not get coded correctly?
W/ regards to correct coding, not really; it's on the lender's end. They have to do the HP as an auto loan HP for the de-duping to work, and they may or may not do so. As an example, I don't think the CU where I used to work had the ability to do auto-loan-specific HPs w/ the package they had from EQ. (When we got hit w/ the shotgun it was through CUDL, tho, so they may have been coded as auto loan HPs in those cases.)
If the rate you'd get by going through the dealer is better than what you can get from your bank or CU, or other lenders in your area, then I would probably just take the HPs and finance through the dealer in your shoes. At least some of the HPs should be deduped, they'll only be scorable for the next 12 months, and if you're close to 800 the effect on your score will probably not be enough to impact approval or rates on future apps in any case. Depending on how many HPs you take, you might find yourself having to recon a cc app and explain inq's were all for auto rate shopping, but that's about it.
I recently co-signed for a used car loan for my DD & SIL. I was very hesitant to do this so insisted on certain conditions. Like you OP, I didn't want a bunch of hard pulls. I was able to limit it to 2, one from the dealer verifying my score before they went further and another single pull from the lending bank I agreed to, after a lengthy discussion with the finance guy at the dealership. Finance guy knew his lenders and what they were likely to offer and what loan length and payments would be, plus who would allow prepay without penalty.
I must have told him 5 times I don't want multiple pulls; I want you to only approach the lender you have indicated to me will give the conditions we discussed. It worked.
I would think your dealer could go through Mazda Financial with one pull (plus the one they do themselves) but if that doesn't give you the deal you want, should then be able to narrow it down to a second choice lender who would also do a single hard pull. These finance guys do this every day. They know which lenders do what.
When I got my Mazda 6 last year, I was going for the special financing. So I told them they could pull and Mazda could pull. No one else. No issues with that. I stressed it at least ten times.
This situation is a bit different since I'm trading in a vehicle (not my 6) that still has a loan on it. Not sure if I can get where I need to be with Mazda financing and the payments, but feel I can definitely do better than the rate I have currently for the one I'm trading in. It's at 5% and I feel like my scores and factors should at least get me a lot closer to the 2.9%.
I think what worried me was the finance advisor was all gung ho about getting the best rate and telling me that it would only count once. I didn't think he was quite correct on that. He did know of two banks, one local FCU and one regional bank, that would be pretty easy to work with based on what he saw without pulling. He offered these up when I was very gunshy about many banks having that information and possibly pulling.
I really appreciate all the comments affirming that and putting me in a better position of knowledge.
@Slabenstein wrote:If the rate you'd get by going through the dealer is better than what you can get from your bank or CU, or other lenders in your area, then I would probably just take the HPs and finance through the dealer in your shoes. At least some of the HPs should be deduped, they'll only be scorable for the next 12 months, and if you're close to 800 the effect on your score will probably not be enough to impact approval or rates on future apps in any case. Depending on how many HPs you take, you might find yourself having to recon a cc app and explain inq's were all for auto rate shopping, but that's about it.
I don't foresee apping for any other cards. I'm very content with what I have in my wallet right now. Just don't want to scare anyone off and have them cancel me. 
It's one reason I keep my util so low.