Credit check

Do car dealerships do a credit check before a test drive?

Buying a car can be stressful and you will encounter obstacles that will impact your final purchase. Credit checks are among the most tedious of these. Some car dealerships like to check your credit history before they even let you test drive their cars. While such a request might seem somewhat intrusive if you’re just browsing, there are specific reasons why they do so.

Today we are going to look at these reasons. We’ll explain why dealerships do credit checks, how they may or may not affect your credit score, and give practical advice on how to avoid this problem altogether.

Why do dealerships do credit checks?

Let’s start with the question in the title before understanding why: Do car dealerships do a credit check before a test drive? The short answer is yes; some of them do. If you’re looking to buy, you browse online to find the vehicle you want, decide to test drive it, come to the showroom, and then get stopped by a salesperson who insists on checking it out.

Why is this done? Car salespeople perform credit checks to estimate your ability to buy and your reliability as a potential customer. Having a good credit history tells the seller that you are serious about your commitments and that you can really afford to buy your car.

Usually dealers do this when you show interest in a more expensive car or model. Nobody likes tire kickers, and they want to be sure you’re committed to the purchase. Although there is a significant difference between buying a Toyota Corolla and a Lamborghini Aventador, some sales reps or dealerships will use this approach regardless of the situation. Before performing a credit check, however, dealership employees will always ask you to sign a paper and allow them to assess your credit score – this means you always have the option to opt out.

What is a credit score? How do credit checks affect me?

Even the cheapest car is a relatively large investment. It makes sense for salespeople to assume you’ll get an auto loan from the bank to finance your vehicle – that’s what most people do. This is where your credit score comes in. Your credit score is an assessment of credit risk used to predict your ability to repay debt. Independent agencies will take your credit history and other information, convert it into a formula, and calculate a numerical value. They will then grade it according to a standard scale.

In this case, “rating” is synonymous with “reliability” because it determines your personal ability to repay on time. The lower your rating, the less likely you are to get a loan with a reasonable interest rate and the higher the risk for the car dealership.

But would someone checking your credit too often negatively affect the score? Yes, but no too. There are two types of credit checks: credit checks and credit checks. The former refers to checks where you specifically apply for a bank loan to purchase a car and complete an application for the dealership, while the latter involves you doing it personally. Soft draws will never affect your credit score. On the other hand, hard draws can impact your credit by around 5 to 15 points, but this drop will only be a temporary fluctuation.

How do I process credit check requests?

As you scour the market for your dream car, credit check requests will come up at various stages of the buying process. Dealerships each have unique customer processes in place and want to be sure that you are trustworthy and worth the investment of their time, even when it comes to a test drive. The soft draws they make will not negatively impact your credit score and should never lead to a definite “no” on your bank loan application.

However, you want to avoid as much unnecessary hassle as possible. If you are just looking for a suitable vehicle and you are not ready to buy it, be very careful.