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

In the Yukon, as across Canada, understanding the distinction between soft and hard inquiries is crucial when seeking car financing. A soft inquiry, often used for pre-approvals or when you check your own credit score, does not impact your credit score and isn't visible to other lenders, serving as a preliminary check without commitment. Conversely, a hard inquiry occurs when you formally apply for a car loan, granting a lender permission to access your full credit report; this typically causes a slight, temporary dip in your credit score and remains on your report for two to three years, visible to other potential lenders.

However, Canadian credit bureaus like Equifax and TransUnion employ a 'rate shopping' logic for auto loans. This means that multiple hard inquiries for the same type of credit-specifically car financing-made within a concentrated period, generally 14 to 45 days (often treated as 30 days for auto loans), are typically grouped and counted as a single inquiry for credit scoring purposes. This allows consumers in YT, and across the country, to compare offers from various dealerships or lenders to find the best rate without unduly penalizing their credit score for each comparison.

Why this matters: While a single hard inquiry has a minimal impact, numerous unrelated hard inquiries over time can signal increased risk to lenders, potentially leading to less favourable interest rates or even loan denial. By strategically rate shopping within this designated window, especially in the evolving 2025 market where interest rates and lending conditions may be more sensitive, you can secure competitive financing terms in the Yukon while effectively managing your credit profile.