Did you know that your credit score affects your interest rate on your car loan?
In other words, if you have an excellent credit score, your auto insurance interest rate will be very low.
If you have poor credit score, then your auto insurance interest rate will be very high.
The higher the interest rate on your auto insurance, the more money it will cost you to take out your auto loan.
So then it begs the question…
What is a good credit score for an auto loan?
Here is a general credit score scale that you can use to determine if you have good enough credit to buy a vehicle:
- 720-850 Excellent credit score
- 680-720 Good credit score
- 620-680 Average credit score
- 350 – 620 Poor credit score
If you fall in the “good” or “excellent” credit score range, then you should have no problems receiving an auto loan when you go to buy a vehicle.
You can still get a vehicle if you have average or even poor credit score. The problem is that since your credit score is weak, the lenders will see you as a riskier client and will compensate for this risk by assessing you a larger interest rate to pay back.
This means you have to pay more money to get your auto loan than if you had great credit score. It really sucks, but that’s life.
You can choose to raise your credit score a much as you can before you apply for an auto loan again. I would wait another 6-12 months or so before you see any real change in your credit score.
I’ve never had bad credit so I don’t know what types of interest rates poor credit people get when they apply for auto loans.
Recently, I went into a dealership looking to purchase a Jeep Wrangler. I didn’t get a credit check done because I wasn’t that certain I wanted the vehicle. I know that credit checks hurt my credit score and I’d prefer not to do it unless I HAD to.
Anyway, the manager who was working with me told me my interest rate would be around 6%. But he was pegging me at a person who had a typical credit score. I would guess that would fall into the “average” range.
But I told him I have amazing credit, and he then told me that my interest rate for my auto loan would be zero percent or very very close to it. I thought that was pretty great.
Anyways, If you have a credit score of 680 or better, I’d say that’s a great auto insurance credit score. It falls under the “good” to “excellent” range.