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What Credit Score is Needed for a Car Loan?

Traditional banks have the strictest lending standards. Many will only loan to a credit score above 700 to minimize their risk. Others may be willing to dip as low as 660. Below that is the sub-prime market. That is a place where most traditional banks do not wish to do business.

Less Than Perfect Credit?

If your score is below 660, you may still find an auto loan by shopping around. Credit unions have looser lending standards and have been known to approve auto loans for scores as low as 620. There are many online auto finance companies that specialize in working with borrowers who have a credit score that has dipped as low as 530.  In fact, we specialize in helping sub-prime appilcants.  Go here to apply onilne for financing – it takes less than three minutes.

The Impact of Credit Score on Interest Rate

You need to keep in mind that the lower your score is, the higher your interest rate may be. You may also find yourself only eligible for shorter term loans to minimize the risk of default. Here is a basic guideline of what interest rates you may face based on your score. Remember this is a general guide, not a definite fact sheet.

  • 740-plus: You would be offered 3.2% interest and may qualify for the zero interest offers with some automaker-based financing arms.
  • 680-739: This score range should let you keep your interest rate under five percent.
  • 630-680: You have hit the sub-prime market hard. The interest rate that you are facing can be as high as 13 percent. You will also be restricted on the amount you can borrow and the length of the loan.
  • Under 630: You may have to pay as much as 18 percent for an auto loan.

Improving Your Credit Prior to Application

    Ideally, you should start preparing for an auto loan about six months before you start looking for cars. Start with your free credit score at If you find any errors, fix them if possible. If you find some old accounts that you forgot about, pay them off. If those old accounts are close to dropping off of your credit report (7 years old in general), then delay your loan application until they are no longer pulling your score down. You may want to consider getting a secured credit card to bolster your credit score. Somewhere between six and twelve on time payments you will see you credit score jump at least 30 points. The key is making all of the payments on time and not carrying a balance during that period.

    If you’re ready to apply, we can help.  Submit your secure application online.  We will match you to a lender or dealer whose approval criteria matches your own profile, taking into account such important variables as location, income, debt-to-income ratio, and more.

    About the Author

    The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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