How does shopping for a car affect my credit score?

Credit scoring systems allow people to shop for the best rates on car loans without having a negative impact on their credit scores. They do so by counting all inquiries for auto loans within a given period of time as a single inquiry.

That time period may vary slightly from one credit scoring system to another but typically is 14-days.

That allows plenty of time for a person to be preapproved by their own lender, or for a car dealership to shop their loan application with multiple lenders in a practice commonly referred to as “shotgunning.”

When a car dealership shotguns a loan application, they send it to many different lenders with which the dealership has relationships. The process usually only takes a few minutes and enables lenders to compete for the loan and for the car dealership to help their customer find the best loan terms.

Often, the customer can pick the car they want, apply for credit, get approved and drive off the lot within a matter of hours, all without leaving the dealership.

Because credit scoring systems count multiple auto loan inquiries as a single inquiry, shotgunning does not affect a person’s ability to qualify for credit.

When considering a large purchase, such as a new car, consumers should get a copy of their credit report well in advance to make sure that everything in it is accurate. Doing so will also give an idea of areas that might need work to improve the credit standing before applying for the car loan.

I also encourage everyone to consider purchasing a credit score at least once when they request their personal credit report. The credit score will come with a description of what from their personal credit report most affected the score, both positively and negatively. Those factors are specific to the individual’s personal credit report and will enable them to identify the specific steps they need to take to become more creditworthy.

Because credit scores are unique to each individual’s credit history, it is unwise to give off-the-cuff advice. While it might be good advice for one person, it could be damaging for another.

By providing customers with credit score risk factor statements this allows to help them take steps to improve their creditworthiness.

Here is an example of a risk base pricing and understanding your credit score.

Do You Need an All-Wheel-Drive or Four-Wheel-Drive Car?

The Pros and Cons of AWD/4WD

Published: 07/09/2013  - by Ronald Montoya, Consumer Advice Editor

Car shoppers looking at any vehicle with all-wheel drive (AWD) or four-wheel drive (4WD) as an option face a difficult decision. Is AWD that much safer and thereby worth the roughly $2,000 premium these vehicles command?

The short answer is this: AWD and 4WD help a vehicle accelerate in slippery conditions, but don't aid with braking and only sometimes improve handling. That said, you shouldn't necessarily cross the feature off your shopping list.

AWD and 4WD are often used interchangeably, but they operate differently and are found on different vehicles. The Edmunds Car Glossary defines the two as follows:

All-Wheel Drive (AWD): A drivetrain that employs a front, rear and center differential to provide power to all four wheels of a vehicle.

Four-Wheel Drive (4WD): A drivetrain that employs two differentials and a transfer case to provide power to all four wheels of a vehicle.

AWD is found on cars and crossovers like the Subaru Impreza and Dodge Journey, while 4WD is reserved for trucks like the Chevrolet Silverado and truck-based SUVs like the Toyota 4Runner.

The Textbook Cases
There are some cases when you should give AWD and 4WD serious consideration: for example, if you live near or spend time in places with unpaved dirt roads. Similarly, if you live in places where it rains or snows for many months out of the year, AWD or 4WD should be high on your list of "must-have" car options.

But for some people, the choice may not be that clear-cut. Here is a list of pros and cons to help you make a better decision.

Pros of AWD/4WD 
Better Acceleration: An AWD or 4WD vehicle can accelerate better than a two-wheel-drive vehicle in inclement weather. "The advantage provided by AWD is mainly in the acceleration, as the traction needs will be equally distributed among all four tires," says Cyrille Roget, director of product marketing for Michelin North America. On a car with front-wheel drive (FWD), "the need for traction will be transmitted only on two tires," adds Roget.

Helps With Traction and Towing: A 4WD truck's improved traction can help you if you are towing from a wet, steep, boat ramp, says Dan Edmunds, director of vehicle testing for Edmunds.com. Similarly, if you go camping off-road in dirt or sandy areas, a vehicle with AWD or 4WD will reduce your chances of getting stuck. But you don't need these systems if towing on dry, paved roads and camping in developed spots is your thing, says Edmunds.

Improves Dry Handling: This only applies to AWD vehicles with torque vectoring. The AWD version of the 2013 Acura TL is one example. Acura's "Super Handling All Wheel Drive" (SH-AWD) distributes torque to all four wheels, using a pair of electromagnetic clutches to freely regulate torque distribution between the rear wheels. This system is one of the rare cases when AWD can help with cornering.

Added Resale Value: Your vehicle may be worth a bit more if you live in an area where trucks are popular, like Texas, or in a place with harsh winters, like Colorado. People are willing to pay a premium for vehicles with AWD and 4WD says Richard Arca, senior manager of pricing for Edmunds.com. If you look at the depreciation curve for these cars, it dips initially, but then regains its value after a few years, Arca adds. But if you live in a place with milder winters, like Southern California, there will be less demand for AWD and 4WD vehicles, and buyers won't be as willing to pay for the feature.

Cons of AWD/4WD 
Added Cost: The cost of an AWD or 4WD system can range from $1,250 on a Honda CR-V to $3,275 on a Ford F-150. You'll also have to factor in slightly more for gas, since the vehicles' rated fuel economy is slightly lower.

Lower Fuel Economy: The AWD and 4WD components weigh more and place a higher load on the engine. This will decrease fuel economy by about 1-2 mpg. It may not seem like much, but this is a 5-10 percent decrease in trucks (4-9 percent in cars and crossovers) and can add up to a couple hundred dollars in a year.

More Maintenance: The differentials on AWD and 4WD vehicles require oil changes. And while the differential fluid doesn't need to be changed as often as the engine oil, it is an extra maintenance item to account for. These oil changes range roughly between $40 and $150. If something goes wrong with the differentials, they tend to cost more to repair than a 2WD vehicle.

False Sense of Security: It is easy to be lured by an automaker's advertising and think that having AWD means you can drive in the snow or rain as easily as you would in dry conditions. But the truth is that AWD and 4WD help only with acceleration and traction. Braking distances and handling will be the same as with the 2WD vehicle.

Focus on Good Tires
Ultimately, your vehicle's tires can be more important than the number of wheels being driven. For example, the 2013 Audi S5 is an AWD car, but it's not a great idea to take it for a ski trip straight from the dealer's lot. That's because the S5 comes standard with summer tires that wouldn't do well in the cold.

Here's another way to think about it: What would perform better in the snow? A front-wheel-drive car with winter tires or an AWD car with all-season tires? Michelin tested this scenario in a study a few years ago. The FWD car with winter tires outperformed the AWD car in nearly every test. The AWD vehicle had the edge in acceleration, but when it came time to hit the brakes, its braking distance was significantly longer than the FWD car. Of course, if the AWD vehicle had a full set of winter tires, it would be the hands-down winner, but it goes to show you the importance of good tires.

Don't Buy a 10 Percent Car
People sometimes buy an AWD or 4WD vehicle for the occasional off-road outing or ski trip, while 90 percent of the time they'll be sitting in traffic or using the vehicle on paved roads. These drivers would be better served by renting a car for their ski trips. This would save them money both on the price of the car plus the lower fuel costs.

Regardless of where you end up, make sure you take the time to weigh the pros and cons and find the right car for you.