If you’re thinking about buying a new or used car in Nebraska, one of the first steps is securing an auto loan.
But before you head to a dealership, you’ll likely experience a credit inquiry as part of the process.
Understanding the difference between hard pulls and soft pulls can help you make informed decisions—and even save you money.
In this blog, we’ll break down the difference between hard and soft credit pulls, explain how they relate to auto loans, and discuss how Nebraskans can navigate these inquiries when applying for an auto loan.
In This Post
What is a Hard Pull Credit Inquiry for Auto Loans?
A hard pull (or hard inquiry) occurs when a lender, such as a bank, credit union, or car dealership, checks your credit as part of evaluating your auto loan application.
When you apply for an auto loan, the lender will typically perform a hard pull to assess your creditworthiness—basically, how likely you are to repay the loan.
Click here to see an example of a hard pull credit inquiry form.
Key Characteristics of Hard Pulls in Auto Loans:
- Impact on Your Credit Score: A hard pull can cause a small dip in your credit score—typically 5 to 10 points. In Nebraska, where many people rely on local banks and credit unions for auto loans, it’s important to remember that this temporary dip is normal.
- Multiple Inquiries for Auto Loans: One thing to note is that if you’re shopping for the best auto loan rates, multiple hard pulls within a short period (typically 14-45 days) will often be grouped together by the credit bureaus. This minimizes the impact on your score, so you can shop around for auto loans without it affecting your credit too much.
- When They Occur: Hard pulls occur when you apply for an auto loan, whether you’re buying a car in Lincoln, financing a new truck in Omaha, or getting a used car loan in Kearney.
- Dealership Financing: If you decide to finance your car purchase through a dealership, they may perform a hard pull to check your credit and determine your eligibility for financing.
- Bank or Credit Union Loans: Local banks and credit unions may also conduct hard pulls when you apply for an auto loan. This is a standard part of the loan approval process.
How Long Does a Hard Pull Affect Your Credit?
A hard inquiry remains on your credit report for up to two years, but the impact on your score usually fades within a few months.
In Nebraska, where people often have long-term relationships with local banks and credit unions, your credit score is typically more stable if you’re managing your debt responsibly.
What is a Soft Pull Credit Inquiry for Auto Loans?
A soft pull (or soft inquiry) occurs when your credit is checked for reasons other than making a lending decision.
Soft pulls do not affect your credit score. While they aren’t used for auto loan approvals, they do play an important role in the process, particularly when dealerships or lenders are pre-qualifying you for an auto loan.
You can find an example of a soft inquiry application here.
Key Characteristics of Soft Pulls in Auto Loans:
- No Impact on Your Credit Score: The key difference between a soft pull and a hard pull is that soft pulls do not affect your credit score. They’re used for informational purposes and don’t count as an inquiry that could potentially harm your credit.
- When They Occur: Soft pulls often happen in the earlier stages of the auto loan process:
- Pre-Qualification or Pre-Approval: Before you even set foot at a dealership, you may apply for pre-qualification or pre-approval for an auto loan. Many lenders, especially credit unions, will use a soft pull to give you an estimate of what kind of loan you could qualify for without impacting your credit score.
- Credit Card Pre-Approvals or Promotions: Some auto dealers or financial institutions may send out pre-approved offers for auto loans based on a soft pull of your credit history.
- Dealership Promotions: Many dealerships will offer special financing or promotional deals, and they may perform a soft pull to gauge whether you are eligible for those offers.
Key Differences Between Hard and Soft Pulls for Auto Loans
| Feature | Hard Pull | Soft Pull |
| Impact on Credit Score | Can cause a small dip (5-10 points) | No impact |
| When it Happens | When applying for an auto loan or financing | When checking pre-qualification, receiving pre-approved offers, or monitoring your credit |
| Visibility to Lenders | Visible to other lenders | Not visible to other lenders |
| Duration on Credit Report | Stays for up to 2 years | Does not stay on the credit report |
Why Does This Matter for Nebraskans Shopping for Auto Loans?
For Nebraskans looking to buy a car, understanding the impact of credit inquiries is essential, especially when it comes to securing the best auto loan terms.
A hard pull can slightly lower your credit score, but it’s an essential step in the auto loan process.
However, if you’re planning to shop around for the best loan rates, be sure to apply within a short window to take advantage of the rate shopping window.
The credit bureaus typically group hard pulls for auto loans within 14-45 days, which means you can apply to several lenders or dealerships and still minimize the impact on your score.
On the other hand, soft pulls, like pre-qualification checks, allow you to explore your options without worrying about your credit score.
Local credit unions or banks in Nebraska, such as Cobalt Credit Union or American National Bank often offer pre-qualification services with a soft pull, giving you an idea of your loan eligibility and terms before you even step foot at a dealership.
Conclusion: Hard vs. Soft Credit Inquiries: What You Need to Know For Auto Loans
Whether you’re buying a new or used vehicle in Omaha, Lincoln, or anywhere else in Nebraska, understanding the difference between hard pulls and soft pulls is important when applying for an auto loan. Hard pulls are a necessary part of the loan application process but can cause a slight dip in your credit score. On the other hand, soft pulls, like pre-qualification or pre-approval offers, allow you to explore your options without impacting your credit score.
By being mindful of how and when your credit is checked, you can shop for the best auto loan terms and keep your credit in good shape—whether you’re financing a new car from a local dealership in Omaha or getting a used car loan from a community bank in Fremont.
References:
- https://www.hhchevy.com/finance-application
- https://www.hhjeepdodgeram.com/finance-application
- https://www.nerdwallet.com/article/finance/rate-shopping-credit-score-loan-mortgage-vehicle-studen
- https://www.experian.com/blogs/ask-experian/hard-inquiry-vs-soft-inquiry
- https://www.youtube.com/watch?v=18EigA8VVhg
- https://cobaltcu.com/
- https://www.american.bank/locations/omaha-metro/
