Another lending source that uses soft inquiries are peer-to-peer lenders, which offer unsecured personal, student and auto loans that are often funded by individuals or groups of individuals as investments. Lenders such as Prosper, Lending Club and Upstart offer car shoppers prequalification for loans that can be used for auto purchases. These nontraditional lenders also say that their inquiries will not affect a potential borrower's score, and so represent another way for borrowers with less-than-perfect credit to know where they stand in terms of APR and payments without a hard inquiry. Peer-to-peer lenders handle prequalifications online, and applicants can expect to have a result back in just a few minutes.
Do keep in mind that peer-to-peer lenders' loans may include origination fees, which most auto lenders don't charge. Should you choose to use a peer-to-peer lender to finance your next car, be sure to factor the origination fee into your calculations.
Another Option: Bring Your Own Report
If you don't want to get preapproved, prequalified or guess a dealer's interest rate, there is a fourth option: Run your own credit report and take it with you to the dealership. The Fair Credit Reporting Act (FCRA) requires the three credit agencies — Equifax, TransUnion, and Experian — to provide you with a free credit report once a year. This report won't include your score, however. The agencies will charge an additional fee if you want that, so have a credit card ready.
Getting your report only takes a few minutes once you've logged in, and since this is a soft credit inquiry, it won't hurt your score. Once you've accessed your report, be sure to print the whole report — not just the summary — and spend a few minutes with a finance or sales manager. The manager should be able to tell you what rate you'd qualify for on the spot.