What Credit Score Do You Need To Buy A Car? | Bankrate (2024)

Before you head to the dealership for your new car, it is important to consider your credit score — and how it will affect how much you spend. Lenders use your credit score as an indication of how likely you are to repay a loan. This means that the higher your credit score, the more favorable your interest rate and terms will be.

In general, you’ll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender. As interest rates increase due to inflation, securing a subprime auto loan may be more difficult — but not impossible.

Experian data from 2023’s fourth quarter found that about 5 percent of total financing fell into the subprime category with a personal FICO score between 501 and 600.If your credit score is below prime, you may need to look for a bad credit car loan. These typically have higher interest costs than traditional auto financing.

What is the minimum credit score for a car loan?

Although there is no official minimum credit score that lenders require across the board in order to apply, you can expect minimum standards. These standards range based on lender specifics and are present in order to ensure that borrowers are lending to those who can confidently pay back their loans.

Not all lenders use the same credit score reporting agencies as their source of truth. There are two main scoring systems you will encounter when financing: FICO score and VantageScore. Most lenders use FICO, which ranges from 300 to 850. VantageScore is less common but still ranges from 300 to 850. Both scores use a mix of your credit history, amount owed, balances and available credit — just weighted differently.

Some auto lenders also use a version of the FICO score called FICO Auto Score. This type of scoring is focused specifically on your ability to pay back debts, and these scores range from 250 to 900.

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It is possible for lenders to use a different type of credit scoring metric. If you are unsure, reach out to your prospective lender to determine what measure will be used.

But the minimum credit scores to qualify for vary based on the lender and the car you intend to finance. myAutoLoan, for example, has a minimum requirement of 575 — falling into the very poor category according to FICO. Gravity, a refinance lender that caters to similar borrowers, sets a minimum of 600.

All of this is to say, even with poor credit, you can find an auto loan for your needs. You just might need to do a bit more homework to get the best rate. And luckily, your credit score isn’t the sole measure used to determine your interest rate. Even though your credit score makes up a large portion of the pie, lenders will also consider your income, employment history and your debt-to-income ratio.

How credit scores affect auto loans

Lenders view your credit score as a numerical representation of how likely you are to repay a loan. The higher your credit score, the less risk lenders think you pose. This means that you are more likely to receive more favorable interest rates and better terms.

Consider the following aspects of vehicle financing that a strong credit score can provide you with.

  • Better interest rates. Most obviously, a good credit score, usually a score of 680 or above, can ensure a low interest rate.
  • Lower monthly payments. The more competitive your interest rate is, the less expensive your monthly vehicle payment will be.
  • Smaller down payment. With the added layer of good credit, you likely can avoid making a large down payment. Though a down payment tends to be a smart move as it can lower your rate even more.
  • Higher chance of approval. Lenders viewing you as less of a risk will mean you will be more likely to secure financing over a bad credit borrower.

How to check your credit score

Many credit card companies offer a free credit score monitoring service that can be found on your banking apps. Outside of this, you can check your credit score from one of the main credit bureaus, Equifax, Experian or TransUnion, directly on their sites.

Auto loan interest rates by credit score

Once you have a grasp on your credit score, it is helpful to understand what average auto loan rates people with your score receive. For some, it may mean working to fix your credit score ahead of application, while for others, it might be smart to focus solely on bad credit lenders.

Consider the following data from Experian’s State of the Finance Market Report from the fourth quarter of 2023.

Credit score rangeAverage new car APRAverage used car APRPercent of loans taken out
Super prime (781-850)5.64%7.66%33.91%
Prime (661-780)701%9.73%47 .82%
Nonprime (601-660)9.60%14.12%12.47%
Subprime (501-600)12.28%18.89%5.48%
Deep subprime (300-500)14.78%21.55%0.32%

As you can see, the largest segment of borrowers financing a vehicle fell under the prime category and also benefited from the second-best available rates. But super prime borrowers don’t just average the best interest rates; they may also qualify for 0% APR offers. This financing option comes directly from an automaker. It means you can walk away without paying interest throughout ownership.

Ways to get a car with bad credit

If you are looking to purchase a vehicle but fall into the bad credit category, it might be harder to secure a perfect loan, but it is all bad news. There are still ways to get a car with bad credit, even if it means potentially higher interest rates.

Consider the following ways to secure a loan even without perfect credit.

  • Look for subprime auto loans. These types of loans are viewed as a risk for lenders, so while they are available to those with poorer credit scores, they likely still carry high rates.
  • Purchase with cash. If you have enough cash to cover the transaction, you can avoid the entire financing process.
  • Work to improve your credit. If patience is on your side, using credit-building strategies can mean money saved in the future. Take steps like paying down your debts, not opening any new accounts or increasing your available credit.
  • Look for errors. Take a deep look at your credit and see if there are any mistakes present that are dropping your score. Keep in mind that it can take up to 30 days to get errors corrected, so give yourself ample time.
  • Consider a buy here, pay here dealership. Offering second-chance car loans, these dealerships should only be used if you cannot secure financing anywhere else. Outside of high rates, there will likely be high fees.

The bottom line

While your credit score serves as an important indicator for lenders considering your loan application, don’t let a bad score get in the way of a future purchase. Instead, remember that it is not the only approval factor, and there are simple steps you can take today to improve your credit. Start working on it now to improve your chances of a good rate when buying your next car.

What Credit Score Do You Need To Buy A Car? | Bankrate (2024)

FAQs

What is an acceptable credit score to buy a car? ›

Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.

Can I get a car with a 600 credit score? ›

This means that the higher your credit score, the more favorable your interest rate and terms will be. In general, you'll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender.

Can you get a car loan with a 500 credit score? ›

It's possible to get a car loan with a credit score of 500, but it'll cost you. People with credit scores of 500 or lower received an average rate of 14.08% for new-car loans and 21.32% for used-car loans in the first quarter of 2023, according to the Experian State of the Automotive Finance Market report.

Can I get a car with a 580 credit score? ›

With a bad credit score, you'll likely be offered some of the highest advertised rates. According to data from Experian, borrowers in the subprime category (a FICO score between 501 and 600) can expect an average rate of 12.28 percent for new cars and 18.89 percent for used cars.

What credit score do I need to buy a $20000 car? ›

There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.

How much downpayment should I put on a car? ›

In general, you should strive to make a down payment of at least 20% of a new car's purchase price. For used cars, try for at least 10% down. If you can't afford the recommended amount, put down as much as you can without draining your savings or emergency funds.

What credit score is needed for a 30000 car? ›

There is no set minimum FICO® Score to get a car loan. However, a good score at 720 or better will get you the best rate. Consider spending some time improving your credit score before shopping for your next car. Even moving up a few points can make a big difference if you have a low score.

Can I get a $40,000 car with a 600 credit score? ›

Unless you have the cash, that means you need an auto loan. It's essential to be knowledgeable about how your auto loan process will be different than someone with a higher score. You might not have the same options, but you can still get an auto loan with a 600 credit score.

Can I get a 30k car with a 650 credit score? ›

If your credit score is above 620, you are likely to get a car loan with favorable terms. Most loans you can get with a 650 credit score require a down payment and come with terms of 48 months or longer. You can expect average interest rates because 650 is a middle-of-the-road credit score.

Which FICO score do auto lenders use? ›

What credit score do auto lenders look at? The three major credit bureaus are Experian, TransUnion and Equifax. The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage.

Is LendingTree legit? ›

LendingTree is accredited by the Better Business Bureau (BBB) and has an A+ rating. Several customer complaints mention unwanted marketing contact from the company and difficulty unsubscribing. LendingTree is typically quick to respond.

How long does it take to get from a 580 credit score to a 700? ›

The time it takes to raise your credit score from 500 to 700 can vary widely depending on your individual financial situation. On average, it may take anywhere from 12 to 24 months of responsible credit management, including timely payments and reducing debt, to see a significant improvement in your credit score.

How fast will a car loan raise my credit score? ›

How fast will a car loan raise my credit score? There's no set time frame for how long it takes a car loan to improve your credit score. After buying a car, you can expect to see your score improve after making monthly payments on time and paying down your loan balance.

Can I get any car with a 700 credit score? ›

The “prime range” runs from 661 through 780. If your credit score is anywhere between 700 to 709, you are in the middle of this segment, and you can get competitive rates to finance your vehicle. However, these depend on your shopping habits, income, and debt-to-income ratio.

Can I get a good car with 700 credit score? ›

As you can see, a 700 credit score puts you in the “good” or “prime” category for financing, making 700 a good credit score to buy a car. While it's always a good idea to get your credit score in its best possible shape before buying a car, if you're already around the 700 range you will be good to go.

Is a 630 credit score good enough to get a car? ›

Can I get an auto loan with an 630 credit score? The short answer is yes, but you're likely to get a significantly higher-than-average interest rate. To put it into perspective, as of November 2022, the typical borrower with prime credit (720 or higher FICO score) got an APR of 5.34% on a 60-month new auto loan.

What credit score do you need to get 0% interest on a car? ›

Credit score: You might need a credit score of at least 740 to be considered for a 0% APR loan. The minimum credit score depends on the dealership and the car you're interested in purchasing.

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