Getting an auto loan with a 680 credit score is fairly easy in today’s loan market, but you will not be offered the most favorable terms possible. In this article we are going to look at potential places to find the auto loan that you need, how you can improve your chances of getting your loan application approved, and what costs you may face because your credit score falls into the ”average” range.
Where to Get an Auto Loan with a 680 Credit Score
At 680, your score is skimming the lower limits of a ”good” rating, with 710 being the lower limit of the classification. That gives you a large number of options for an auto loan. While most national lenders tend to deny auto loans for scores under 720, you may get approved by a bank that you have had a long term relationship with, so start there.
If you do not have a relationship with a large bank, turn to your local credit union. Credit unions traditionally have looser lending guidelines than national banks, so often approve auto loans for members who have credit scores as low as 640 with some stretching down as far as 620. Should you be denied by a credit union, look to a local finance company. Again, they often have looser lending requirements.
Your third option is the internet. There are several places you may find the auto loan you need on the web. The first are websites that broker loans. These websites will take you application, then shop it to as many lenders as need be to find the financing you want. Lending Tree is an example of this type of website, as is Keystone Auto Loans. The second are peer-to-peer websites. On these websites you post your need and individual investors choose whether to fund you or not. If those routes do not interest you, try an online specialty lender. These lenders are licensed finance companies that choose to operate at the lowest costs possible, so their office is online. They offer auto loans to people who have credit scores under 620, have a high debt-to-income (DTI) ratio, or have other credit issues that traditional lenders will not accept.
How to Get an Auto Loan a 680
Getting an auto loan with a 680 credit score shouldn’t be very difficult, but you can improve your chances with a little bit of preparation. The first step is to get a free copy of your credit report from www.annualcreditreport.com. You should request this report at least three months before you plan to shop for a new vehicle. This will give you time to find errors and try to correct them. Once you have corrected any errors, or if there were none, you should spend the remainder of the three month period lowering your DTI.
Most lenders want to see that a loan applicant has a DTI that is under 36 percent. That means all of your recurring monthly payments, including the estimated payment for the loan applied for, should be less than 36 percent of your pre-tax income. For example, if your base pay is $36,000 a year ($3,000 per month), your total expenses must be less than $1,080. If yours is higher, look for ways to reduce it. Paying off a small account is one option, but lowering your credit card balances is the best way. Lowering your balance will lower your monthly payment and improve your credit score. You can follow this link to see how (link).
What Your Score May Cost You
A 680 credit score is going to cost you in three areas. The first is the down payment that you will be required to offer. At 680, you will not qualify for a zero down loan. You will need to offer ten percent of the total purchase price of your new vehicle in cash, trade, or a combination of the two. The next area is going to be in the interest rate that you will have to pay. The lowest rates are reserved for borrowers with excellent credit (740 or higher). At 680 you can expect to pay 1 to 3 additional points on your auto loan. If the prime rate is 1.99 percent, you will be asked to pay between 2.99 and 4.99 percent for your loan. The last place your credit score is going to cost you is in the monthly payment. A 680 credit score may only qualify you for a loan of up to 60 months, so you may face a higher payment than you might expect.
Please keep in mind that the points in this article are only generalizations about the current auto loan market. All lenders have proprietary lending guidelines, so may offer you a better interest rate, longer repayment term, or deny your loan for reasons not covered here.