Are Minimum Credit Scores Needed for a Car Loan?
Every lender has its own criteria for judging whether or not they would consider a borrower credit worthy. So, minimum credit scores to get a car loan do not meet rigid cutoff points. Look at some general scores to get an idea of how you will be treated when you embark on your auto loan shopping journey.
The Minimum Truth
The important thing to consider when you shop for your car loan, is that the higher your credit score, the less you will pay for your car loan and the more money you will save. This is the minimum truth regarding credit scores and auto loans.
Starting From the Top
Credit scores range from 300 to 850. Around 725 is the average score across the population. A score around 300 is usually indicative of a bankruptcy. If you have a score over 680, you will not have any trouble finding a car loan and you will be offered the best interest rates. In spite of advice against getting a loan through a dealer, you may even find a good loan in those circumstances.
Next Rung on the Ladder
You will still have no trouble finding a loan if your credit score ranges from 650 to 680. You may not get the best interest rates, but you will still be able to find a decent loan. If you were going for a mortgage, a high-end auto loan, or some other large purchase, before you make an application, you might want to figure ways to improve your score to save yourself a substantial amount of money.
Bring Up Your Minimum
If your scores range between 500 and 600, you are not in the best position for a good car loan. You might want to put off borrowing for a while and definitely work on improving your credit score. If you are in the high 500’s you will probably find financing but your interest rates, fees, and monthly payments will be rather steep.
If you range in the low 500’s you will have to work to find a lender, but you can always find something. You may end up paying more in interest than the car is worth. This would be a good time to scale down to perhaps a good used vehicle. Save some money on the side, improve your credit scores, and you may be ready for your dream car in a few years.
A Minimum Credit Score for a Auto Loan?
If your score dips below the 500 mark, you may want to consider putting off borrowing for awhile. Sure, you will be able to find a loan, but your interest rates are going to be over the top and you might be under the burden of that car loan for a very long time.
No Real Minimum Credit Score for a Car Loan
As you can see, there is no real cut-off minimum credit score to get a car loan. There are ranges that indicate the success of finding a decent car loan, but no real across-the-industry demarcations. Regardless of your credit score, you must diligently shop to find the rates and terms most agreeable to your financial situation.