What Is A Good Credit Score To Buy A Car?
Miranda Crace6-minute read
PUBLISHED: January 29, 2024
When you’re applying for an auto loan, your credit score plays a major role in getting approved and the interest rate you’ll land on. For a good rate, you’ll likely need a score of 670 or higher, based on the FICO® Auto Score model some lenders use. Your credit determines how attractive you are to potential lenders and what you bring to the negotiating table when trying to secure an affordable monthly payment. Having great credit will require you to pay significantly less than someone with a poor credit rating will shell out.
Let’s take a look at what a good credit score to buy a car looks like and how you can improve your odds of getting a car loan with a good interest rate.
Which Credit Score Do Auto Lenders Look At?
A credit score is used to determine how likely someone is to make their loan payments on time and pay off their entire debt. While all credit scoring models use the same factors to determine your score, they vary in ways that could either help or harm you when you’re applying for a loan. Key factors that determine your score include your payment history, credit utilization, the current debt you carry and your credit mix.
When people apply for a credit card or a loan, creditors obtain FICO® Scores from one of the major credit reporting agencies. Auto lenders use a special reporting system called FICO® Auto Score when determining the creditworthiness of a potential customer. The three credit reporting bureaus that contribute information to your FICO® Auto Score are TransUnion®, Equifax® and Experian™. A FICO® Auto Score may place more weight on whether you’ve made your monthly payments on past auto loans than whether you’ve ever accidentally missed a credit card or utility payment, for example.
FICO® Auto Score ranges are typically as follows:
- Super prime (781 – 850)
- Prime (661 – 780)
- Nonprime (601 – 660)
- Subprime (501 – 600)
- Deep subprime (300 – 500)
What’s The Minimum Credit Score To Buy A Car?
Most borrowers of a new car loan have an average credit score of around 730, while those who take on a used car loan customarily carry a credit score of around 675. Whether you wish to purchase a used or new vehicle, just remember that a higher credit score is always better. To be granted the lowest interest rate possible, make it a goal to improve your credit score until you’ve eclipsed an 800 score.
It’s still possible to be approved for an auto loan with a lower credit score, but you’re likely to be subject to a high annual percentage rate (APR) on an auto loan if your credit is poor. It’s also much more difficult to finance a new vehicle than a used one.
How Credit Scores Affect Your Auto Loan
Per the table below, see how your credit score impacts the interest rate at which you’re likely to get a car loan. In this same table, based on data from Forbes and USA Today, you’ll also find that prime borrowers are the largest group among those who are approved for an auto loan. The next largest group is super prime borrowers, followed by nonprime, subprime and deep subprime.
Credit Score Range (FICO® Auto Score)
Average Interest Rates (New Car)
Average Interest Rates (Used Car)
Percentage of Auto Loans
Super prime (781 – 850)
4% – 6%
5% – 8%
20% – 21%
Prime (661 – 780)
5% – 7%
7% – 10%
44% – 47%
Nonprime (601 – 660)
12% – 14%
17% – 18%
Subprime (501 – 600)
10% – 12%
17% – 19%
13% – 16%
Deep subprime (300 – 500)
13% – 15%
20% – 22%
1% – 2%
With the average credit score of car loan borrowers being around 730, those in the prime credit score range tend to make up the majority of approved applicants per year.
A higher credit score can also help you avoid having to make a larger down payment. However, putting more money down can lower your monthly payment and interest rate.
How To Improve Your Credit Score For A Car Loan
Credit score ranges indicate how much trust lenders have in borrowers. While auto lenders will likely base your creditworthiness on the FICO® Auto Score model, you can still check your score using the traditional FICO® Score range. Your credit score will be in one of these five categories:
- Exceptional (800 – 850)
- Very good (740 – 799)
- Good (670 – 739)
- Fair (580 – 669)
- Poor (300 – 579)
If your credit is fair or poor, you may want to try improving your credit score before applying for a loan. You can do this by paying down credit cards, student loans and other debts on time. Or, you can check your credit score and contest any inaccurate information or negative marks on your credit report.
Because your credit score can have such a dramatic impact on how much you pay for an auto loan, you should check your credit score annually, at the very least, and make sure your credit report is accurate. You can do this by enrolling in a credit monitoring service or contacting any of the major credit bureaus directly and requesting a free copy of your credit report.
Ways To Buy A Car With Bad Credit
Improving your credit takes time, and you might not be able to wait years to purchase a vehicle. That said, you can still be approved for a car with bad credit. You can do this by:
- Making a larger down payment on the car or vehicle
- Trading in your current vehicle
- Providing proof of a stable income
- Finding a co-signer for your loan
One way to save money on your vehicle is to accept a loan at a higher interest rate and then refinance your car loan to a lower rate at a later date.
How To Apply For An Auto Loan
Applying for an auto loan is similar to applying for other types of loans. Follow these steps to car ownership:
- Check your credit report. As recommended above, check your credit score routinely to make sure you’re in good standing. Also, take steps to boost your score, if necessary. Knowing where your score stands early on will allow you room to make adjustments, such as finding a co-signer or saving up for a bigger down payment.
- Shop around for lenders. Many car dealerships offer in-store financing, but you’re free to look around and see if there’s a better deal to be found. Auto loans are also offered at traditional banks and credit unions and through private lenders.
- Get prequalified with different lenders. If you’re looking outside of dealership financing, you could get preapproved or prequalified for an auto loan before even meeting with a dealer. This can give you an upfront estimation of the loan terms you’ll qualify for. In addition, you may gain some bargaining power with the dealership if you want to negotiate a better financing deal.
- Turn in a loan application. Once you’ve decided on a lender, submit a loan application along with the necessary identification and financial documents. This step will usually require a hard inquiry into your credit history.
- Wait for approval. It shouldn’t take more than 1 – 7 business days to find out your approval status and receive the money in your bank account if approved. You’ll begin making your monthly payments on the loan about 30 days after receiving your funds.
Alternatively, you could apply for a personal loan to finance your car purchase. Unlike auto loans, personal loans don’t require any down payment and are most often unsecured (i.e., your car wouldn’t be used as collateral). Using a personal loan as an auto loan can also have other advantages, including the absence of restrictions on the type of car you buy.
FAQs About Credit Scores For Car Loans
See what others are asking – and the answers to their questions – about car loans and credit scores.
What FICO® Score do car dealers use?
As mentioned, many auto lenders use the FICO® Auto Score model when determining your creditworthiness. Depending on the lender, though, your score may be based on the traditional FICO® Score or VantageScore® credit score ranges.
What’s a bad credit score to finance a car?
Depending on the credit scoring model being used, a poor (300 – 579) or deep subprime (300 – 500) credit score is considered the most unfavorable to lenders. If you want a good interest rate and term on your auto loan, aim to have a credit score of at least 670.
How can I get my credit score up fast?
Improving your credit takes time, but it’s possible as you continue to make on-time payments for student loans, credit cards and other debts. Keep checking your credit score to see how it’s improved, and be sure to dispute any mistakes you see on your credit report.
Your credit score largely determines your repayment cost on an auto loan. Checking your credit score before you seek a loan will provide a strong clue about how easy or hard it’ll be to get an auto loan, and how much interest you might pay. If you want to save money, consider attempting to improve your credit before applying for a loan.
Does a personal loan sound like it could work for your situation? If so, get started on an application today with Rocket LoansSM and see what you prequalify for today.
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