What Credit Score Is needed To Get A Car Loan? Complete Guide

Credit Score Is needed To Get A Car Loan, You’ll probably need an auto loan to help pay for your new car if you want to purchase one. Today, the vast majority of buyers in the United States do, with the average price of a new car topping $47,000.

The lender will perform a credit check on you as part of the application process whether you apply for a loan via a bank or through the dealership. Here are the credit requirements and options available to you if your credit is less than ideal for obtaining a car loan.

Credit Score Is needed To Get A Car Loan

How Do Auto Lenders Determine Credit Scores?

You have multiple credit scores instead of simply one. The scoring models make use of the same fundamental data from your credit reports, but they give varying weights to other factors. The two principal scoring systems are: Credit Score Is needed To Get A Car Loan

The most well-known and popular rating firm is FICO. The range of FICO scores is 300 to 850.

  • The most well-known and popular rating firm is FICO. The range of FICO scores is 300 to 850.3.
  • The VantageScore is a more recent player. The most recent VantageScore ranges from 300 to 850, just like FICO does, in contrast to older versions’ 501 to 990 range.

For certain objectives, the major scoring models can also generate more customized scores. For instance, FICO provides the FICO Auto Score, a credit score tailored to the auto lending business. In contrast to other FICO Scores, the FICO Auto Score has a distinct weighting mechanism, with credit usage having a greater influence and isolated late payments—such as a single error—having a lesser one. Multiple iterations of the FICO Auto Score further complicate issues.

FICO Auto Scores are used by many vehicle dealerships, but not all of them. Ask your lender which scores they look at before approving a credit check if you’re unsure or just interested.

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What is the required minimum score to purchase a car?

Lenders consider your income and credit score when evaluating your application for a vehicle loan. Based on their scores, lenders group borrowers into different categories, such as:

  • Super prime: 781 to 850
  • Prime: 661 to 780
  • Non-prime: 601 to 660
  • Subprime: 501 to 600
  • Deep subprime: 300 to 500

You need a credit score of 661 or higher to be eligible for the majority of conventional vehicle loans because lenders typically look for applicants in the prime area or above.

How to Buy a Car with a Poor Credit Score

You could still be able to secure a car loan if your credit score is below the prime level, but it might be more difficult and expensive. If you have fair or bad credit, you have three alternatives for auto financing:

1. Be ready to make a higher interest payment

Having bad credit makes you a riskier applicant in the eyes of lenders. You might be able to acquire a car loan, but the interest rate will probably be much more than it would be for someone with good or excellent credit.

For instance, in the second quarter (Q2) of 2022, the average interest rate for prime borrowers buying new autos was 4.03%. The rate was 6.57% for non-prime borrowers and 12.84% for deep subprime borrowers.

Your overall loan cost may increase significantly as a result of that increased rate. For instance, if you financed $37,000 with a four-year loan at 4.03% interest, your monthly payment would be $836 and your total interest cost would be $3,124.

However, your monthly payment would increase to $990 if you financed the same amount and were only approved for a four-year loan at 12.84% APR. Additionally, you would pay a total of $10,505 in interest, a $7,381 difference.

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The Better Your Credit Score, the Lower Your Interest Rate
Prime Borrower Non-prime Borrower Deep Subprime Borrower
Loan Amount $37,000 $37,000 $37,000
Loan Term 48 months 48 months 48 months
Interest Rate 4.03% 6.57% 12.84%
Monthly Payment $836 $879 $990
Total Interest $3,124 $5,175 $10,505
Total Repaid $40,124 $42,175 $47,505

2. Go to a dealer that specializes in buyers with poor credit

If a regular dealership won’t give you a loan, you might be able to acquire financing from one that caters to customers with bad credit. These dealerships, which are sometimes marketed as “buy here, pay here” operations, provide in-house finance for used cars.

To balance the danger of lending to consumers with poorer credit ratings, these dealers, however, frequently impose exorbitant interest rates.

3. Submit a co-signer loan application.

If your credit score is in the non-prime to deep subprime zone, you might want to think about becoming a co-signer for a car loan. A co-signer is someone who is willing to apply for a loan alongside you and, preferably, has decent to excellent credit, such as a family member. A co-signer reduces the lender’s risk by sharing responsibility for the loan. Compared to applying on your own, you’re more likely to be approved for a loan and receive a cheaper interest rate. However, if you are unable to pay back the loan, your co-signer will be responsible for the balance.

What credit score is needed to buy a car without a cosigner?

In general, you need a credit score of at least 600 to be eligible for a typical vehicle loan, but different lenders have different minimum credit score requirements. You might need to hunt for a bad credit vehicle loan if your credit score is considered subprime.

Is 700 a good credit score to buy a car?

Higher credit means lower rates
You should be able to obtain a new vehicle loan with an annual percentage rate of no more than 5.82% or better, or a used car loan with a rate of no more than 7.83%, if your goal credit score is 661 or higher. 781–850 as superprime.

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Minimum credit score to buy a car?

There is no minimum credit score needed to purchase a car, even more recent models, albeit lenders have various requirements. The lowest interest rates are available to customers with outstanding credit, however some lenders will work with those who have lower credit ratings.

Faqs About Credit Score Is needed To Get A Car Loan

If I use a co-signer, will I get the same rate that they would alone?

When you apply for a loan with a co-signer, the lender takes into account the credit histories of both individuals. Consequently, you will not receive the same rate as they would have if they had applied independently. However, you have a better chance of being accepted and getting a lower interest rate.

Can I buy a car with no credit?

Although challenging, it is doable. Lenders view those with no credit in the same light as those with poor credit. Normally, a co-signer is required, or you might have to purchase from a dealership that offers in-house financing.

Are interest rates the same on new vs. used cars?

Loans for used cars typically have higher interest rates than loans for brand-new cars. The average interest rate for a loan on a new car was 4.33% in Q2 2022, while the average for loans on old cars was 8.62%.


Your credit score affects your financing possibilities whether you’re looking for a new or used automobile, so it’s important to know where you stand. Some credit card businesses and other resources offer free credit score reports.

It’s also a smart idea to get vehicle loan quotes from a few banks and credit unions before visiting the dealership. This can provide you more negotiating power with the dealer and help you locate the best financing arrangement. It might also enable you to determine how much you can spend on a car.

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