When you’re getting ready to buy a car, one of the most important things to consider is your credit score. Your credit score determines whether or not you’ll be approved for financing and what rates and terms you can expect to receive. While some lenders will accept scores as low as 550, there are certain types of lending that require higher scores than that before you can qualify. This article explains the lowest credit score to buy a car, depending on the type of financing you’re using. Here are the answers!
Lowest Credit Score to Buy a Car
Minimum credit score requirements vary by lender. While some auto lenders don’t require any minimum credit score, others require as high as 700. It’s worth noting that most used car dealers won’t even consider an application unless you have fair credit—typically at least 620 or so. The higher your credit score, though, generally means lower interest rates and better terms on your loan terms. With a low credit score, you might not get approved for financing through traditional channels, leaving dealerships looking for other ways to finance purchases and sometimes charging exorbitant fees to do so. If possible, try to take steps toward improving your credit before applying for financing—that way you know exactly what kind of buyable options will be available to you.
Lowest Bad Credit Score to buy New Vehicle
Bad credit or no credit doesn’t mean you can’t buy a new car. Most dealers don’t check your score until you try to secure financing. The best way to know how low your credit score can be is by taking out a loan with bad or no credit. If there are creditors that approve loans with very low scores, then most likely, there will be some dealers who will give you great deals on used cars even if your credit isn’t up to par. You may also find used vehicles for sale through private sellers who might not require as much of a down payment or maybe they won’t ask for any money down at all. While buying a used vehicle without having good credit should lower your expectations when it comes to price, it shouldn’t prohibit you from getting behind the wheel of dependable transportation.
Low FICO score with bad credit history
Most lenders, including most auto finance companies, use FICO scores when determining whether or not to offer you financing and at what interest rate. Some lenders won’t even issue an auto loan without one. Scores range from 300-to 850, with anything below 500 considered subprime. If your score is in that range, don’t give up hope: about 20% of all loans fall into that category. That doesn’t mean you can get a good deal on financing—but it does mean there are still options out there for you. You just have to know where to look. By contacting smaller banks and credit unions, consumers with bad credit can often find lower rates. Even if they don’t preapproved you right away (and they probably won’t), they might be willing to approve you after looking at alternative ways of proving income; according to Experian, 60% of consumers who qualified for nonprime loans didn’t have bank statements or pay stubs readily available during their shopping process.
Bad credit car buying tip
Since your credit score plays such an important role in whether or not you’re able to secure auto financing, it’s a good idea to know exactly what you need to do when it comes time for car shopping. Read on for some bad credit car buying tips. (Get even more financing advice in Bad Credit Auto Financing: What You Need To Know Before Applying For A Loan .)