Credit inquiry question

[Anonymous]

We are planning to buy a house soon (been trying for some time). Have excellent credit. Lease on our car ends in a month and we'd like to buy it out. Option 1: preapproved (no credit check) loan at 3.91%. Option 2: shop around for lower (think we can get close to 2%) but get hit by a credit check at a sensitive time due to possible home purchase. What would you do? Loan amt is ~ 16k. Thanks!

[Anonymous]

Don't buy a new car right before trying to buy a house! Ask the dealer to extend the lease - they usually will for another six months.

And FWIW, I paid cash for a new car several years ago and my credit was dinged for it. The sons of b****** ran their standard "auto loan" credit check on me to ensure my personal check would be good, as if they couldn't repo the car and have me prosecuted if it bounced.

You really don't want this in your credit file going into a home purchase.

[Anonymous]

Anonymous wrote:Don't buy a new car right before trying to buy a house! Ask the dealer to extend the lease - they usually will for another six months.

And FWIW, I paid cash for a new car several years ago and my credit was dinged for it. The sons of b****** ran their standard "auto loan" credit check on me to ensure my personal check would be good, as if they couldn't repo the car and have me prosecuted if it bounced.

You really don't want this in your credit file going into a home purchase.

THIS. You don't know how many closings have failed because people go and buy a car just before buying a house. Extend the lease and wait.

[Anonymous]

Okay thanks guys. I already verified that the preapproved option does not require a credit check. I did the math and it's only about $800 that I 'could' save by getting a lower rate. What besides the credit check could hurt me here?

[Anonymous]

The additional debt service.

The second poster warned of closing risk, even if you get a mortage, it will be at a higher rate. Calculate even 1/8% on a 30-year and compare it to the 800 bucks you'll "save" on the car loan.

[Anonymous]

Anonymous wrote:The additional debt service.

The second poster warned of closing risk, even if you get a mortage, it will be at a higher rate. Calculate even 1/8% on a 30-year and compare it to the 800 bucks you'll "save" on the car loan.

Okay sorry for being unclear. I was pointing out that the harm of a credit check is clearly not worth the $800; so I get that I will have additional debt but actually the only negative on my credit report (and dh's) is not enough credit (no car, student or home loans). We are both in the 760s.

[Anonymous]

760's is very good. Don't blow it. I'm the PP with car bought for cash. IIRC, that little episode knocked 60 points off my FICO score.

[Anonymous]

Anything below a 760 puts you in just a slightly less desirable range, so definitely don't make any big purchases now.

[Anonymous]

This is so f'ing ridiculously sh!tty. Oh well, glad I asked. Thanks pps.

[Anonymous]

We had to buy a car earlier this year due to a car accident, and opted to finance about $8000 of it so we would have more cash reserves because we wanted to buy a house. We found a home about 2.5 months later and, while we did have to explain what the credit inquiry related to car purchase was for, it didn't seem to " ding" us too badly. Our credit scores were/are just over 800 and seemed to dip slightly (maybe 5-10 points?) after the car purchase.

Good luck! It didn't end up being an issue for us, the credit inquiry nor the added debt (~150/month). We were prepared to pay off the car loan completely if it became an issue, however.