What is the lowest 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.
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.
You may be surprised to learn that there's no minimum credit score for car loans. Some lenders offer auto financing even for people with poor credit histories. However, your credit score plays a crucial role in the rates you get as well as which lenders will work with you.
Buying a car with a 550 credit score is definitely doable with the right approach. In this guide, we'll walk you through each step of the process, from assessing your financial situation to sealing the deal.
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.
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.
After researching the car finance industry, we think that myAutoloan is best for those with bad credit. The company offers auto refinancing, lease buyouts and loans for new and used cars. Additionally, the marketplace only requires a credit score of 575 — making it easier for subprime borrowers to get a loan.
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.
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.
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.
How big of a loan can I get with a 550 credit score?
Lenders specializing in bad credit score loans may be willing to approve loans up to $50,000. These loans will typically have much higher interest rates and origination fees.
The time it takes to increase a credit score from 500 to 700 might range from a few months to a few years. Your credit score will increase based on your spending pattern and repayment history. If you do not have a credit card yet, you have a chance to build your credit score.
If you want to take out an auto loan with bad credit or no credit, the majority of subprime lenders will require a down payment of 10% or $1,000, whichever is greater. While this is the minimum, you can always put a larger down payment, which helps since you have to pay a lower monthly payment for the rest of the loan.
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.
Lender | Loan Amounts | APRs |
---|---|---|
Upstart | $1,000 - $50,000 | 6.4% - 35.99% |
Oportun | $300 - $18,500 | 10.07% - 35.95% |
OneMain Financial | $1,500 - $20,000 | 18% - 35.99% |
RISE | $500 - $5,000 | 60% - 299% |
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
Aside from your usual information, car dealerships will also obtain information such as any previous loan defaults or repossession, late payments, signs of bankruptcy, and history of credit repair. This information will help your dealership decide how to approach your car financing application.
The base FICO score is also called FICO Score 8 or 9. It's not designed specifically for auto loans, but many lenders use it. It's a number between 300 and 850, and a higher score means that a person is more likely to make loan payments on time.
While some dealerships look at your base FICO score, others might look at your FICO Auto Score. This industry-specific rating provides a more accurate picture of the likelihood of you repaying an auto loan instead of the likelihood of you repaying any credit obligation.
Top Auto Loan Lender | Lowest APR | Our Award |
---|---|---|
PenFed Credit Union | 5.24% | Best Credit Union Auto Loan |
Auto Approve | 5.24%** | Best Auto Refinance Rates |
Consumers Credit Union | 6.54% | Excellent Credit Union Auto Loan |
Auto Credit Express | Varies | Best Auto Loan for Bad Credit |
Which company gives lowest car loan?
Loan Provider | Scheme Name | Interest Rate |
---|---|---|
SBI Bank | Assured Loan Scheme | 8.80%-9.70% |
Axis Bank | New Car Loan | 9.10%-13.80% |
Bank of baroda | Digital Car loan | 8.70%-9.55% |
Bank of baroda | Baroda Car loan | 8.70%-11.15% |
CarMax® is an auto financing company that uses the FICO® Score.
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.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
Equifax and Experian are the most commonly used credit bureaus by auto lenders. They offer services that are directed specifically at the auto industry, and each gets a portion of their revenue from the industry.
References
- https://www.investopedia.com/articles/personal-finance/062315/how-interest-rates-work-savings-accounts.asp
- https://www.bankrate.com/loans/auto-loans/when-is-the-best-time-to-buy-a-car/
- https://lanterncredit.com/auto-loans/which-credit-score-is-used
- https://www.lendingtree.com/auto/calculators/payment/
- https://listerhill.com/blog/2019/6/getting-auto-loan-with-600-credit-score
- https://www.marketwatch.com/guides/car-loans/best-companies-to-refinance-auto-loan-with-bad-credit/
- https://www.creditmantri.com/car-loan-interest-rates/
- https://www.fool.com/the-ascent/personal-loans/car-loan-credit-score/
- https://www.investopedia.com/terms/i/islamicbanking.asp
- https://www.moneygeek.com/personal-loans/how-to-get-a-30000-personal-loan/
- https://www.carlblackoforlando.com/blog/what-is-tier-1-2-credit/
- https://en.wikipedia.org/wiki/Riba
- https://www.marketwatch.com/guides/car-loans/what-credit-score-is-needed-to-buy-a-car/
- https://www.hyundaiofasheville.com/finance/car-buying-tips/how-much-down-payment-for-a-car-with-bad-credit/
- https://www.capitalone.com/cars/learn/managing-your-money-wisely/can-you-refinance-your-auto-loan-with-bad-credit/2623
- https://www.nerdwallet.com/article/finance/650-credit-score-good-or-bad
- https://www.nerdwallet.com/article/loans/auto-loans/bad-credit-score-car-loan
- https://www.marketwatch.com/guides/car-loans/72-month-auto-loan-rates/
- https://www.bankrate.com/finance/credit-cards/credit-card-vs-debit-card/
- https://wallethub.com/answers/cc/tier-1-credit-cards-2140671938/
- https://www.cnbc.com/select/what-is-considered-an-excellent-credit-score/
- https://www.bankrate.com/finance/credit-cards/zero-percent-intro-apr-guide/
- https://www.sccu.com/articles/auto/60-month-vs-72-month-auto-loan-comparison
- https://www.lendingtree.com/auto/refinance/the-best-and-worst-time-to-refinance-your-auto-loan/
- https://www.moneygeek.com/credit-cards/analysis/average-credit-score-by-age/
- https://www.experian.com/blogs/ask-experian/what-to-do-after-you-were-denied-a-refinance/
- https://www.fool.com/the-ascent/credit-cards/what-0-apr-definition/
- https://www.marketwatch.com/guides/car-loans/auto-loan-rates-may-come-down-in-2024/
- https://portal.ct.gov/DOB/Consumer/Consumer-Education/ABCs-of-Banking---Banks-and-Our-Economy
- https://www.marketwatch.com/guides/car-loans/best-auto-refinance-rates/
- https://islamic-relief.org/interest-riba/
- https://www.bankrate.com/finance/credit-cards/what-happens-when-my-0-intro-apr-period-ends/
- https://www.investopedia.com/mortgage/refinance/7-bad-reasons-to-refinance-mortgage/
- https://www.rategenius.com/not-approved-car-loan-refinance
- https://www.bankrate.com/loans/auto-loans/how-refinancing-an-auto-loan-affects-credit/
- https://www.jdpower.com/cars/shopping-guides/how-soon-can-i-refinance-my-car-loan-after-i-purchase-my-vehicle
- https://themortgagereports.com/76288/basic-refinance-requirements
- https://www.capitalone.com/learn-grow/money-management/is-650-a-good-credit-score/
- https://www.bankrate.com/loans/auto-loans/do-i-need-cash-to-refinance-auto-loan/
- https://www.kembadelta.org/education/5_best_conditions_refinance_car.pdf
- https://www.caranddriver.com/auto-loans/a43149333/credit-score-car-dealers-use/
- https://www.finn.com/en-US/blog/leasing/how-to-increase-your-credit-score-to-lease-a-car
- https://bfsi.economictimes.indiatimes.com/news/banking/explained-how-lenders-make-money-through-no-cost-emi-schemes/104802970
- https://www.transunion.com/blog/credit-advice/whats-considered-a-good-credit-score
- https://www.marketwatch.com/guides/car-loans/how-to-lower-car-payment/
- https://www.bankrate.com/loans/auto-loans/car-loan-denied/
- https://www.caranddriver.com/auto-loans/a42168046/can-you-refinance-car-with-same-lender/
- https://www.lendingtree.com/home/refinance/mortgage-refinance-denied/
- https://www.progressive.com/answers/refinancing-a-car-loan/
- https://www.capitalone.com/learn-grow/money-management/what-does-0-apr-mean/
- https://www.lendingtree.com/credit-repair/how-auto-loan-affect-your-credit-score/
- https://www.bankrate.com/loans/auto-loans/what-credit-score-do-you-need-to-buy-a-car/
- https://www.getpliant.com/en/blog/what-is-a-black-credit-card/
- https://www.carleasingconcierge.com/blog/credit-scores-and-car-buying
- https://www.marketwatch.com/guides/car-loans/auto-loan-interest-rates-by-credit-score/
- https://www.marketwatch.com/guides/car-loans/tesla-finance/
- https://www.investopedia.com/articles/personal-finance/111414/0-balance-transfers-who-really-benefits.asp
- https://www.creditkarma.com/auto/i/refinance-car-loan-bad-credit
- https://www.creditninja.com/blog/where-do-banks-get-money-to-lend-to-borrowers/
- https://m.economictimes.com/wealth/borrow/loans/auto-loan
- https://fairmoney.io/blog/what-is-kyc-and-account-tier-in-banking-and-how-does-that-affect-your-money/
- https://www.papayaglobal.com/glossary/tier-1-bank/
- https://www.creditninja.com/blog/what-is-a-tier-4-credit-score/
- https://www.caranddriver.com/auto-loans/a31280000/average-apr-for-car-loan/
- https://www.nerdwallet.com/article/loans/auto-loans/refinancing-a-car-what-are-the-pros-and-cons
- https://www.caranddriver.com/research/a31516576/what-credit-score-is-needed-to-lease-a-car/
- https://www.southparknissan.com/blog/which-credit-score-do-car-dealerships-use/
- https://www.nerdwallet.com/article/finance/credit-score-needed-to-buy-car
- https://www.lendingtree.com/auto/financing/toyota/
- https://cred.club/check-your-credit-score/articles/how-long-does-it-take-to-get-a-700-credit-score-from-500
- https://capitalbankmd.com/homeloans/calculators/refinance-calculator
- https://cleartax.in/s/nps-tier-1-vs-nps-tier-2
- https://www.bankrate.com/mortgages/do-i-need-money-down-to-refinance/
- https://www.marketwatch.com/guides/personal-loans/can-you-get-a-loan-with-a-550-credit-score/
- https://www.jdpower.com/cars/shopping-guides/what-kind-of-car-financing-rate-can-i-get-with-a-700-credit-score
- https://www.mortgagecalculator.org/calcs/car.php
- https://borrowell.com/blog/is-650-a-good-credit-score
- https://www.investopedia.com/best-auto-refinance-loans-5069118
- https://www.cnbc.com/select/should-you-get-a-zero-apr-credit-card/
- https://corporatefinanceinstitute.com/resources/economics/how-do-banks-make-money/
- https://www.toyotadirect.com/blogs/3084/auto-loan/what-does-toyota-consider-excellent-credit/
- https://www.bankrate.com/loans/auto-loans/auto-loan-refinance-requirements/
- https://dfi.wa.gov/financial-education/information/predatory-lending
- https://stellarfi.com/answer/what-credit-score-does-carmax-use
- https://www.fool.com/the-ascent/personal-loans/how-much-car-afford/
- https://www.autobytel.com/what-is-tier-123-credit
- https://www.rocketloans.com/learn/financial-smarts/credit-score-above-700
- https://www.investopedia.com/articles/personal-finance/081216/zero-interest-loans-why-you-should-beware.asp
- https://www.pcmag.com/encyclopedia/term/tier-1
- https://www.bloomberg.com/news/articles/2024-02-29/why-is-it-so-hard-to-get-a-car-loan-right-now-banks-tighten-standards
- https://wallethub.com/answers/pl/is-a-no-interest-loan-legal-2140777203/
- https://www.nerdwallet.com/article/loans/auto-loans/when-can-you-refinance-a-car-loan
- https://caredge.com/guides/what-credit-score-do-car-dealers-use
- https://www.dicksaysyes.com/auto-blog/what-do-car-dealerships-look-at-for-financing/
- https://www.quora.com/How-do-banks-make-money-when-they-sell-cars-on-finance-car-loans
- https://www.wilsonkia.com/finance/car-buying-tips/how-to-get-a-lower-interest-rate-on-a-car-loan/
- https://www.creditkarma.com/credit-scores/777
- https://myhome.freddiemac.com/refinancing/costs-of-refinancing
- https://www.marketwatch.com/guides/personal-loans/interest-free-loans/
- https://www.myfico.com/loan-center/home-mortgage-rate-comparison/
- https://www.creditkarma.com/advice/i/what-is-a-bad-credit-score
- https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score
- https://www.creditkarma.com/auto/i/can-you-get-a-car-loan-with-bad-credit
- https://www.lendingtree.com/auto/what-credit-score-is-needed-to-buy-a-car/
- https://www.linkedin.com/pulse/establishing-tier-1-2-business-credit-small-kevin-dunlap
- https://www.caranddriver.com/news/a40341556/monthly-car-payments-average-rising/
- https://www.ramseysolutions.com/debt/zero-percent-financing
- https://time.com/personal-finance/article/how-credit-card-companies-make-money/
- https://www.creditninja.com/blog/what-is-tier-1-credit/
- https://www.bankrate.com/mortgages/when-to-refinance/
- https://www.equifax.com/personal/education/credit/score/articles/-/learn/what-is-a-good-credit-score/
- https://www.cnn.com/cnn-underscored/money/auto-loan-interest-rates-by-credit-score
- https://www.caranddriver.com/auto-loans/a41855998/0-apr-car-loan/
- https://cars.usnews.com/cars-trucks/advice/average-auto-loan-interest-rates
- https://www.cnbc.com/select/what-to-do-if-denied-mortgage-refinance/
- https://www.marketwatch.com/guides/car-loans/best-auto-loan-rates/
- https://www.forbes.com/advisor/auto-loans/best-auto-refinance-lenders/
- https://www.marketwatch.com/guides/car-loans/bad-credit-car-loans/
- https://www.bankrate.com/loans/auto-loans/down-payment-calculator/
- https://www.sukuk.com/education/muslims-reject-interest-riba-274/
- https://www.creditninja.com/blog/what-is-a-tier-2-credit-score/
- https://www.marketwatch.com/guides/car-loans/when-is-the-best-time-to-refinance-a-car/
- https://www.cnn.com/cnn-underscored/money/how-much-does-it-cost-to-refinance-a-mortgage
- https://www.marketwatch.com/guides/car-loans/pay-off-car-loan-early/
- https://www.econoautosale.com/credit/bad/buy-car-with-550-credit-score/
- https://controlallfinances.com/blogs/news/what-is-tier-1-credit-score
- https://www.nerdwallet.com/article/loans/auto-loans/requirements-refinance-car
- https://www.toyotaofnaperville.com/toyota-credit-lease-tiers/
- https://www.usbank.com/home-loans/mortgage/first-time-home-buyers/credit-score-for-mortgage.html
- https://www.creditkarma.com/auto/i/refinancing-car-loan
- https://wallethub.com/answers/pl/how-much-can-i-borrow-with-a-600-credit-score-1000508-2140806901/
- https://www.nucoro.com/insights/how-banks-make-money-and-why-its-shifting-in-2021