What Is a Good Credit Score For a Car Loan?
Picture this: You’re cruising down the highway, windows down, music up. The only thing missing? A perfect car to complete the dream. That’s where car loans come in—a financial tool that helps turn vehicle ownership into reality.
Buying a car with an auto loan is the best option for many people. However, as with most good things in life, you’ll need a good credit history before you can get one. However, according to Experian, the average FICO credit score for Americans is 715 as of spring 2025. This strong credit profile indicates that many consumers in the US can secure competitive interest rates and favorable terms on auto loans.
To have a clear picture of how credit scores impact your car loan options, scroll down and find answers to the following questions:
- What credit score is needed to buy a car?
- What is a good credit score for a car loan?
- How can your credit score affect the loan’s interest rate?
Minimum Credit Score for Car Loans
What credit score do you need to buy a car? The answer is not one-size-fits-all. Lenders typically require a FICO credit score of at least 660 for a standard auto loan. According to Experian, 71% of all car loans in the US were obtained by borrowers with a score of 661 or higher.
Borrowers with lower numbers can still qualify but may face higher interest rates.
Credit scores usually fall into the following categories:
- Superprime (781–850): these borrowers are considered the least risky by lenders due to their history of reasonable financial behavior and timely payments.
- Prime (661–780): individuals in this range qualify for good interest rates and loan terms.
- Nonprime (601–660): loans are still accessible but often have moderately higher rates.
- Subprime (501–600): borrowers must be prepared for high costs and strict loan conditions.
- Deep Subprime (300–500): applicants face the most challenging loan conditions, including the highest rates on the market; improving credit rating before trying to obtain a loan is strongly advisable.
For example, a superprime borrower with a credit score of 780, qualifying for a $25,000 car, can secure a 4% interest rate, while a prime applicant with a score of 700 will receive a 6% interest rate on the same car. In other words, the lower the score, the higher the interest rate that borrowers will have to deal with.
How Credit Scores Affect Car Loan Terms
Your credit score is a key determining factor in what car loan conditions you can get. It affects not just your loan approval chances but also the interest rates, loan amounts, and monthly payments. Lenders assess risk based on credit history, with higher scores unlocking better terms.
Let’s consider an example of how the score impacts loan terms. Suppose Oscar and Charles want to take out a 5.5-year loan to pay for a Porsche 911 Carrera (price: $115,000).
| Oscar | Charles |
|---|---|---|
Credit score | 730 (Good) | 599 (Poor) |
Interest rate | 1.99% | 14.99% |
Monthly payment | $1,777.09 | $2,003.6 |
Total interest paid | $2,287.94 | $17,237.6 |
Total cost of the car | $117,287.94 | $132,237.6 |
So, Charles will overpay for the car by $14,949.66 more than Oscar. The reason is simple: Charles has a higher interest rate because of his poor credit score. As shown above, your credit rating directly impacts borrowing costs, making creditworthiness a key factor in car financing. But don’t panic yet! Even if you don’t have a good enough credit score for a car loan with decent terms, there are still some alternatives.
Options for Low Credit Scores
What credit score do you need to finance a car? While you can technically apply for a loan regardless of your current credit standing, securing it with a low credit score can be challenging. Thankfully, there are some alternative financing solutions:
- A Buy-Here-Pay-Here (BHPH) is a type of car dealership that offers in-house financing instead of third-party lender services. This means that the provider both sells the car and provides the loan, and the loan requirements wouldn’t be nearly as strict as when dealing with traditional loans.
- Using a co-signer means having another person (typically someone with a stronger credit history and stable income) agree to share financial responsibility for the loan with the primary borrower.
Here are other tips to improve car loan approval chances with a low credit score:
- Reduce existing debt
Lowering credit card balances and other debts can improve your debt-to-income ratio.
- Demonstrate stable income
Even if you currently have a low credit score, providing recent pay stubs, tax returns, or bank statements can prove your repayment ability.
- Save for a larger down payment
Often, a bigger upfront payment reduces the loan amount, making lenders more willing to approve the loan.
- Pick a shorter loan term
While monthly payments may be higher, lenders may be more willing to approve a short-term loan due to reduced risk.
- Choose an affordable car
A lower-end vehicle means a smaller loan, increasing the likelihood of approval.
Ideal Credit Score for the Best Rates
You’ve picked it—a sleek sedan or a rugged SUV, but the thing standing between you and the driver’s seat is car loan approval.
The credit score needed to buy a car varies depending on the lender, but as usual, a higher score can help you secure better loan terms and lower interest rates. As mentioned above, a good credit score to buy a car is 661 or higher, but a score of 700 or higher will help you secure the best loan terms and interest rates. As usual, borrowers in the superprime category have access to the lowest interest rates on the market, reducing overall loan costs.
Having a high credit score means:
- Smaller monthly payments.
- Access to higher loan amounts.
- Stronger financial position and negotiating power with lenders.
Individuals with excellent credit may also qualify for 0% financing offers from automakers, making vehicle ownership significantly more affordable. In contrast, a lower score means steeper rates, increasing the total cost of borrowing. Keep in mind that the exact definition of what is a good credit score for a car loan changes over time, so always check several loans from different lenders before finalizing the purchase.
Having a good credit history certainly makes it easier to obtain a car loan with favorable terms, but it doesn’t mean you can’t buy a car if your rating is currently low.
To increase your chances of success:
- Consider making a significant down payment;
- Find a co-signer with a good credit history;
- Choose an affordable car.
