You need to buy a car and you’re looking to take out a loan to get one.

But the problem is, your credit score may not be the greatest and you’ve got a big question on your mind:

What credit score is needed to buy a car?

Today, I’m going to try and help you answer that question!

First things first though, here’s some credit information you need to know:

Your credit score is based on information accumulated by the 3 main credit bureaus – Equifax, Experian, and Trans Union. There are many different credit scores, but the one main score that should matter to you is your FICO score.

The FICO score is the score used by most lenders which is why it’s the one you want to pay most attention to. A FICO score is score between 300 – 850, with 850 being a perfect credit score possible.

Also, note that the higher your credit score is, the lower interest rate your car loan will be. This is important, because if you have a low credit score, you may still be able to get a loan for a car, but what you have to pay every month in interest will likely be much higher than someone with excellent credit score.

So What Is The Minimum Credit Score Needed To Get A Car Loan?

Well, there isn’t one answer that fits them all. It will depend on each lender. You see, the lower your credit score is, the more risk there is that you may not pay back your loan. That’s how the lenders see it. They base your ability to pay back your loan on statistics – and statistically, people with lower credit scores default on their loans more.

Now, each lender will take on this risk differently. Some lenders are willing to take on more risks and some want to stay on the safer side. So the lenders that are willing to take on more risk will be more favourable to you if you have a lower credit score.

But, to give you an idea of what the lowest credit score possible to get an auto loan is: It’s somewhere around 620-650.

If you have a credit score around 620, then it’s realistic to be prepared to shop around a little for a car loan, because there’s a real possibility that some lenders may deny your car loan application when you have the minimum score.

Also note that if you get a car loan with a credit score in the low 600’s, it’s not unreasonable to be charged an interest rate of around 15%-20%. That’s obviously a very high number. So you need to take into consideration the total cost of the loan and if it’s worth it to get the car right now.

Another Option – Sub Prime Loans

There are lenders who specialize in lending money to people with poor credit. These are called sub prime loans. If you have a credit score in the 500’s then you will probably need to look for a subprime lender, as you probably won’t get a conventional loan. You can also expect sub prime loans to have even higher interest rates.

Ways To Get A Car Loan With A Bad Credit Score

I wanted to share a few ways you could get a car loan even if you have really bad credit rating.

The two big things you can do is to put more money down on for the car or get a co-signer.

Putting more money down for a car means you have to borrow less money, and lenders are more willing to lend to someone who has bad credit if they have to lend less money. When it comes to loans of any kind, it’s 100% about risk. And the fact is that it’s less risky to lend less money because if that loan isn’t repaid, well, it’s a loss, but a smaller one.

Getting a co-signer can seal the deal for a car loan even if you have absolute horrible credit. This is because the co-signer becomes legally obligated to pay back the loan in case you don’t. That means your cosigner is also on the hook for the loan repayment.

The important thing to note here is that you can still pay back the loan all by yourself, but in case you cannot pay it, then you and your co-signer are responsible for whatever happens after – whether it goes into default or you guys figure out a way to pay it back.

Parents and close family members are usually the type of people to cosign loans for other family members. If you have a parent with good credit score, then you can consider asking them. Another thing to note is that your cosigner need to have good to great credit, because if they have bad credit, it won’t help you get a loan because that person is just ask risky to not pay it back as you are!

You can also check out my guide on how to get a no money down car loan if you have no cash at all.

How To Get A Car Loan With Bad Credit In The Near Future

If you can hold off on buying a car today, then you should if you have poor credit. This is because if you are able to secure a loan, then great! You can have your vehicle. But the payments will probably be pretty high because your interest rate will likely be not as favourable.

But, if you don’t absolutely need a car right now, then you MUST work really really hard at bringing your credit score up. Your credit score is everything when it comes to the amount of interest you pay. If you can even take 6 months to 1 year to work on it, it could make a big difference the next time you apply for a loan.

If you want to learn how to raise your credit score a quickly, click here.

A Few Last Options To Get A Bad Credit Car Loan

Lastly, I just wanted to give you a few other ideas to get a low credit score car loan.

If you have a good and long relationship with your bank, that’s probably the first place to go if you can’t put more money down or get a cosigner. Your bank knows you and will treat you more favourably. They can sometimes pull some strings and give you a loan themselves. Nothing is guaranteed, but it’s easily worth the trip to your bank.

You can also consider buying a cheaper car or a used car. Again, the less money you need to borrow, the more likely it is you’ll get a loan.

Shop around for a loan. You don’t have to go with the first loan you get. I wouldn’t shop everywhere for a loan though, because pulling your credit score over and over again will hurt it. But figure out a few places that you think would approve you and apply for a loan there. Take the loan with the best rate (interest rate). Because this is the cost of borrowing.

You may find a loan with lower monthly payments, but if the interest rate is higher, then this loan isn’t cheaper. Choose the loan with the lower interest rate as long as you are able to meet the monthly payments. Good luck.

And just one last thing, your credit score can affect your auto insurance rates too. So it’s just super super important to have a good credit score. If you don’t have one right now, it’s the the end of the world. It’s what you do about it right now that’s important. So if you’re smart, you’ll start working at it to make it excellent. In the long run, it will save you so much money. It will be worth all the effort you put in.

lowest credit score to buy a car