In MB, what should I know about soft vs hard inquiries for car loans?

In Manitoba, understanding the distinction between soft and hard inquiries is crucial when applying for car loans. A soft inquiry occurs when you check your own credit score, or when a lender pre-approves you for a loan without a formal application. These inquiries do not impact your credit score, as they are not indicative of new borrowing activity and are merely informational. They are useful for gauging your eligibility and getting an initial sense of potential rates without commitment.

Conversely, a hard inquiry is triggered when you formally apply for a car loan, giving a lender permission to pull your full credit report. Each hard inquiry typically results in a minor, temporary dip in your credit score, as it signals to other lenders that you are actively seeking new credit. However, a key nuance for car loans, applicable across Canada including Manitoba, is the 'rate shopping window.' Credit scoring models, like those used by Equifax and TransUnion, generally treat multiple hard inquiries for the same type of loan (e.g., auto financing) made within a concentrated period - typically 14 to 45 days - as a single inquiry for scoring purposes. This 'rate shopping window' is designed to allow consumers to compare offers from various lenders to secure the best interest rate and terms without unduly penalizing their credit score. Therefore, as an MB resident, you can confidently shop around for the most competitive car loan rates within this timeframe, knowing that the impact on your credit score will be minimized. This empowers you to make an informed decision, potentially saving you thousands over the life of your loan, especially in a dynamic market environment like 2025 where rates can fluctuate.