What Credit Score is Needed to Buy a Car? | LendingTree (2024)

While there is no set credit score to get an auto loan, a majority of approved borrowers have scores above 660. Having a low credit score won’t necessarily keep you from getting an auto loan, but you will likely pay a higher interest rate.

Here is what you need to know about auto loan credit scores and how to increase your score to get a better rate.

The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan.

About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian. Meanwhile, low-credit borrowers with scores of 600 or lower accounted for only 14% of auto loans.

Despite these car loan statistics, buying a car with poor credit is possible, especially if you can provide a generous down payment. However, having a good to an excellent score will increase your chances of approval and help you secure the most competitive rates and terms.

Understanding auto loan credit scores

Your credit score is how lenders measure your financial stability and determine your repayment reliability. In general, the higher your credit score, the better rate you can get. Experian gives the following credit score tiers and average interest rates for new and used car loans.

CategoryScore rangeAverage rate for a new carAverage rate for a used car
Super prime781 - 8505.61%7.43%
Prime661 - 7806.88%9.33%
Nonprime601 - 6609.29%13.53%
Subprime501 - 60011.86%18.39%
Deep subprime300 - 50014.17%21.80%

Source: Experian’s State of the Automotive Finance Market Q3 2023

Based on the data above, borrowers with scores in the high 600s could expect to receive rates around 9.33% when financing a used car, compared with 21.80% for borrowers with scores below 500.

Our auto loan calculator can help you compare monthly payments between credit score tiers. For example, if you have a credit score of 790 and want to finance a new car for $30,000 with a 60-month term and no down payment, your estimated payment would be $574.56 a month. However, this payment would increase to $626.98 a month if you have a credit score of 640.

When researching car loan options, keep in mind that advertised rates typically apply to high-credit borrowers. If you want to unlock the most attractive rates, consider boosting your credit score before applying.

What is a FICO Auto Score?

Many dealers use a FICO Auto Score instead of a traditional FICO Score or VantageScore when evaluating your car loan application. Your FICO Auto Score can range from 250 to 900, depending on your previous auto loans. Factors such as how much you borrowed and any delinquencies or auto loan bankruptcies can contribute toward this credit scoring model.

Your FICO Auto Score also looks at credit utilization rate, length of credit history, credit mix and new credit, while ensuring that certain factors don’t have such a significant impact. For example, unpaid medical bills won’t ding your score as much as other types of debt.

While checking and monitoring your credit scores and accessing your credit reports is free, you must pay for your FICO Auto Score at myFICO.com.

Checking your credit score before applying for an auto loan can help you know where you stand. If you can’t qualify for a car loan, here are some ways to improve your credit score:

  • Check your credit report for errors. Mistakes do happen, along with fraudulent activity. If you notice something amiss, contact the credit bureaus to dispute credit report errors.
  • Pay all bills on time. Payments more than 30 days late can drastically affect your credit score. Set regular reminders to stay on top of important monthly bills.
  • Reduce your credit card debt. Lenders may look at your credit utilization ratio and debt-to-income (DTI) ratio to assess whether you have enough income to cover your essential bills in addition to a car loan payment.
  • Increase your credit limits. Requesting a credit limit increase will alter your credit utilization ratio and could improve your credit score. However, avoiding a credit limit increase is best if you think you might rack up more charge than you can afford.
  • Keep your credit accounts open. Closing your current credit card accounts could hurt your score by reducing your overall credit limit and changing your credit utilization ratio. Unless you are paying high annual fees, keeping your credit card accounts open can help keep your credit profile in good shape.
  • Avoid applying for other types of credit. Opening new accounts can hurt your credit score by reducing your average age of accounts. If possible, avoid taking on new debts within six months of applying for a car loan.

What Credit Score is Needed to Buy a Car? | LendingTree (1) Learn more about how to buy a car.

How to get a car loan with bad credit

If you have a score of 660 or lower, you will likely need to look at bad-credit auto loans. While these loans can help you finance a car, note that you may get a higher interest rate.

Here are some tips to get approved for a car loan with bad credit:

1. Save for a down payment

Providing a significant down payment for a car can help offset a limited or damaged credit profile, reassuring the lender that you can handle this debt. The less risky you appear, the better rates and terms you could receive.

If you don’t have enough cash, you can consider bad-credit car loans with no money down — which can provide 100% car financing. Just be prepared to pay higher interest rates when getting an auto loan for bad credit.

2. Calculate your loan budget

Decide how much you can comfortably borrow without getting over your head in debt. Start by researching the cost of owning a car and finding an option that fits your budget. The 20/4/10 rule can help you determine the ideal amount to spend on a car:

  • Saving for a 20% down payment
  • Picking a repayment term of four years or less
  • Budgeting less than 10% of your monthly income on transportation costs

You can also weigh the pros and cons of financing a used car versus a new car. While new cars have lower financing and maintenance expenses, used cars have lower upfront costs, including reduced insurance and registration fees.

3. Add a cosigner

A car loan cosigner can improve the chances of loan approval and help you get a lower auto loan rate. Lenders typically view two people taking responsibility for the loan as a positive sign that they will receive payments each month.

Make sure your cosigner knows the legal responsibility involved with cosigning before proceeding. If you can’t repay the debt, it will be the cosigner’s responsibility to make payments. If the loan defaults, both applicants’ credit scores will suffer.

4. Shop around for auto loan preapprovals

Lenders will evaluate your credit history slightly differently when determining your auto loan interest rate. That’s why it’s best to shop around to find the best auto lender for your situation.

An auto loan prequalification requires a soft credit check and suggests rates and terms based on limited information. A preapproved car loan, on the other hand, involves a hard credit check but provides a more accurate offer and can help with the negotiation process.

You can generally apply for multiple preapproval car loan offers within a 14-day window without further impact on your credit score.

5. Compare offers and finalize loan details

If you receive offers from multiple lenders, read the fine print for additional expenses, such as origination fees and prepayment penalties. These hidden costs can make a loan cost more than expected, especially if you have to pay a hefty prepayment penalty for an auto loan refinance down the road.

In addition to loan costs, watch out for common dealer fees — some of which you can negotiate or pass on.

What Credit Score is Needed to Buy a Car? | LendingTree (3)

Buyer beware

Dealerships advertising “guaranteed financing” and “buy here, pay here” should be a last resort. These businesses tend to toe the line of predatory behavior. If you take a loan with one, make sure you pay a fair price for the car and get a competitive auto loan rate.

You have several options when it comes to applying for a car loan.

Dealer financing

Auto companies like Ford and Toyota offer their own car financing, allowing you to streamline the lending and purchasing process. However, dealerships tend to charge higher interest rates than other lenders.

Credit unions

Credit union auto loans can provide low rates, since the profits go to credit union members through reduced interest rates and higher returns on savings products. You must be a credit union member and meet their eligibility requirements.

Traditional banks

Brick-and-mortar banks generally provide competitive rates with flexible terms and limited fees. However, traditional lenders tend to impose stricter eligibility requirements, making them harder to get for low-credit borrowers.

Online lenders

Online auto lenders typically have the most flexible credit requirements, with many lenders catering to bad-credit borrowers. You can also save time by submitting your auto loan application online. However, these loans tend to have higher interest rates and more fees than credit unions and banks.

The higher your credit score, the better the rate you’ll get for any loan. A credit score above 660 will typically allow you to qualify for an auto loan without a hassle. A credit score of 781 and above will typically allow you to qualify for the most competitive rates, which could save you thousands of dollars in interest.

Financing a car with bad credit is more challenging, but it’s possible.

Buying a car with bad credit is possible with credit scores as low as 500. Having a high down payment, getting a good deal on the car and having a cosigner can all improve your likelihood of being approved.

People with prime credit scores of 661 or higher likely don’t need an auto loan cosigner.

Yes, you can buy a car with no credit history. One option is to pay for the car with your savings or to provide a significant down payment. Alternatively, you can show the lender proof of consistent income to reassure them you can handle the debt. However, not having adequate credit means you will likely end up with a higher interest rate.

Yes, a car loan will improve your credit score if you make the payments on time and in full until you trade in the car, sell it or pay off the loan.

What Credit Score is Needed to Buy a Car? | LendingTree (2024)


What Credit Score is Needed to Buy a Car? | LendingTree? ›

While there is no set credit score to get an auto loan, a majority of approved borrowers have scores above 660. Having a low credit score won't necessarily keep you from getting an auto loan, but you will likely pay a higher interest rate.

What does your credit score need to be to buy a car? ›

Key Takeaways. Your credit score is a major factor in whether you'll be approved for a car loan. Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.

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.

Is a 720 credit score good enough to buy a car? ›

Absolutely. Your 720 credit score will qualify you for an auto loan, assuming your income justifies it. However, it's important to realize that your credit score can make a big difference in the interest rate you get. And this is especially true in auto lending.

Can you get a nice car with a 600 credit score? ›

A credit score of 600 won't necessarily keep you from getting an auto loan, but it's likely to make that loan more expensive. Taking steps to improve your score before you apply for a car loan can put you in the driver's seat and make it easier to negotiate the best possible loan terms.

What FICO score do car dealers use? ›

The score range for the Auto Score is 250-900 (instead of the traditional 300-850). FICO promotes that Auto Score will help dealerships and lending institutions in five distinct ways: Increase regulatory compliance.

Is it hard to get approved for a car loan? ›

Americans are having a harder time getting approved for auto loans, as banks worry over the risk of defaults at a time when high interest rates and elevated car prices are squeezing budgets. With borrowers struggling to make their monthly car payments, banks are responding by tightening credit standards.

What credit score does Toyota use? ›

Toyota Financial Services requires you to have a score of at least 610 to qualify for an auto loan. And to nab Toyota's 0.00% interest deal (if it's available), you must have a credit score of at least 690.

Does applying for a car loan hurt your credit? ›

Shopping for the best deal on an auto loan will generally have little to no impact on your credit score(s). The benefit of shopping will far outweigh any impact on your credit. In some cases, applying for multiple loans over a long period of time can impact your credit score(s).

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

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.

What is the lowest credit score for a car loan? ›

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.

How big of a loan can I get with a 720 credit score? ›

You can borrow $50,000 - $100,000+ with a 720 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

How rare is a 720 credit score? ›

Who Has a 720 Credit Score?
Credit ScoreTierPercentage of Americans
720 – 850Excellent38.12%
660 – 719Good17.33%
620 – 659Fair/Limited13.47%
300 – 619Bad31.08%

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

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.

How big of a loan can I get with a 600 credit score? ›

With FICO, fair or good credit scores fall within the ranges of 580 to 739, and with VantageScore, fair or good ranges between 601 to 780. Many personal loan lenders offer amounts starting around $3,000 to $5,000, but with Upgrade, you can apply for as little as $1,000 (and as much as $50,000).

Is 700 a good credit score to buy a car? ›

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.

Can I buy a car with a 500 credit score? ›

Though the options can feel limited at times, there is no specific score required to receive a car loan, so possibilities exist for any credit score. That said, there may be fewer options available, and the terms may be less appealing if your score is on the lower end.

Can you get a car loan with a 550 credit score? ›

Though it may be more challenging to find a lender that's willing to work with you, it is indeed possible to obtain a loan with a credit score of 550. Most lenders require a minimum credit score of between 600 and 650, but some lenders specialize in personal loans for those with lower scores.

How much loan can I get with a 650 credit score? ›

You can borrow as much as $40,000 - $100,000+ with a 650 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.


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