If you’re planning to buy a new car, you’ll most likely need an auto loan to help pay for it. With the average cost of a new vehicle exceeding $47,000 today, the great majority of buyers in the United States do.

Whether you apply for a loan through the dealership or at a bank, the lender will run a credit check on you as part of the process. Here’s what credit score you’ll need to be approvedꦓ for a car loan—and what you can do iౠf your credit is less than perfect.

What Credit Scores Do Auto Lenders Use? 

You don’t have just one credit score, but several of them. The scoring models use the same basic information from your 澳洲幸运5官方开奖结果体彩网:credit reports but wei✨gh certain factors differently. The two major scoring models are: 

• FICO: FICO is the best-known and most widely used scoring company. 澳洲幸运5官方开奖结果体彩网:FICO Scores range from 300 to 850.
• VantageScore: VantageScore is a newer competitor to FICO. Though earlier versions of the 澳洲幸运5官方开奖结果体彩网:VantageScore ranged from 501 to 990, the latest VantageScore goes from 300 to 850, the same as FICO does.

The major scoring models can also provide more specialized scores for particular purposes. For example, FICO offers the FICO Auto Score, an industry-specific credit score intended for auto lenders. The FICO Auto Score uses a different weighting system from other FICO Scores, with 澳洲幸运5官方开奖结果体彩网:credit utilization having a bigger impact and isolated late payments—such as a one-off mistake—having a lesser one. To further complicate matters, there are multiple versions of the FICO Auto Score.

Many car dealerships rely on FICO Auto Scores, but not all do. If you’re not sure and are curious, ask your lenওder which scores they check before consenting to a credit check. 

What Is the Minimum Score Needed to Buy a Car?

When lenders review your auto loan application, they look at your income and credit score. Lenders divide customers into categories based on their scores, 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

In general, lenders look for borrowers in the prime range or bette🌊r, so you will need a score of 661 or higher to qualify for most conventional car loans. 

How to Buy a Car With a Poor Credit Score 

If your score is below the prime range, you may still be able to 澳洲幸运5官方开奖结果体彩网:get an auto loan—but it could be harder to obtain and more expensive. Here are three options for financing a car if you have fai♏r or poor credit: 

1. Be willing to pay a higher interest rate

If you have poor credit, lenders see you as a riskier applicant. You may be able to get a car loan, but you’ll likely pay a much higher 澳洲幸运5官方开奖结果体彩网:interest rate than someone with good or excellent credit ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚwill. 

For example, the average interest rate for prime borrowers purchasing new cars was 5.38% in the first quarter (Q1) of 2024. For near-prime borrowers the rate was 9.62%, while for deep subprime borrowers, it was 15.62%.

That higher rate can add substantially to your total 澳洲幸运5官方开奖结果体彩网:loan cost. For example, if you financed $37,000 with a four-year loan at 5.38% interest, you would have an $858 monthly payment and would pay $4,206 in t♉otal interest. 

But if you financed that same amount and only qualified for a four-year loan at 15.62% interest, your payment would jump to $1,041 per month. And you would pay $12,𝓰987 in total interest—a difference of $8♏,781. 

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

If you cannot qualify for a loan at a traditional dealership, you may be able to get financing from one that specializes in buyers with poor credit. Typically advertised as “b🥂uy here, pay here” dealerships, they offer ꦡin-house financing for used vehicles. 

However, these dealers tend to charge very high interest rates to offset the risk of lending to borrowers with lower scores.

3. Apply for a loan with a co-signer

If your score is in the non-prime to deep subprime range, you might consider applying for a car loan with a 澳洲幸运5官方开奖结果体彩网:co-signer. A co-signer is someone, such as a family member, who is willing to apply for a loan with you and, ideally, has good to excellent credit. A co-signer shares responsibility for the loan, reducing the lender’s risk. You’re more likely to qualify for a loan and get a lower interest rate than if you applied on your own. However, if you’re unable to make the loan payments, your co-signer will be stuck with the bill.

Frequently Asked Questions (FAQs)

The Bottom Line

Whether you’re looking for a new car or a used one, your credit score plays a big role in your financing options, so it’s worth knowing where you stand. You can 澳洲幸运5官方开奖结果体彩网:get your credit score for free from some credit card companies and on𝓡line sources.

Before heading to the dealership, it’s also a goo💟d idea to obtain auto loan quotes from one or mor🐽e banks and credit unions. That can help you find the best loan deal and give you some extra leverage in bargaining with the dealer. It could also help you decide how much you can afford to spend on a car.