What Credit Score Is Needed to Buy a Car
Credit scores of all shapes and sizes can lead to your next car purchase.
What credit score do you need to buy a car
If buying a car is the goal, then qualifying for an auto loan is generally the gateway to get there. The process of qualifying for an auto loan considers multiple factors like:
Income — proof of stable income supports your potential to make timely payments
Proof of residence — confirming residence allows the lender to locate the car in the event it requires repossession
Credit score — a favorable score reflects your ability to manage multiple lines of credit or loans over time, and sustain a fiscally healthy debt profile
A majority of lenders use
What is a good credit score to buy a car
Scores starting at 670 are categorized as “Good” by FICO. These scores can begin to earn more attractive incentives like a lower annual percentage rate (APR) from lenders in the financing agreement. Anything above 800 is considered an “Exceptional” FICO score. Lenders may be more likely to want to land a deal with you if your score indicates a strong history of consistent repayment and good credit management.
When considering what credit score is needed to buy a car, it may be helpful to think through which terms you actually want at the closing table. If you’re looking for wiggle room in the asking price or competitive APR rates, the credit score you need could be higher than if you’re just looking to qualify for a new, used, or Certified Pre-Owned purchase. Therefore, the better your score, the more likely you are to hold negotiation power and tailor the auto financing to your preferences.
Can I buy a car with this credit score
If you are on the fence about whether your score will make the cut, all hope isn't lost. In fact, it is not uncommon for people with less than perfect credit scores to achieve an auto loan. There is also the option to prequalify or receive pre-approval for an auto loan. These alternatives will result in a soft credit pull that won’t negatively impact your credit score, but instead give you a more realistic view concerning your chances of approval.
If you do not pre-qualify or get pre-approved for a loan, you may want to consider other options like a trade-in or down payment. Trade-ins or putting a down payment on a car can lower your prospective loan amount and improve your ability to qualify. You also can find a co-applicant with an improved credit score to co-sign your loan. This means that your co-signer will legally enter the contract with you as part-owner of the car, and is thus dually responsible for the loan repayment.
In your car-buying journey, you may come to realize that the credit score needed to buy a car is different from the score achieving the best incentives. Credit scores are only one part of the equation in auto financing, and every lender may hold different requirements. These ranges of good scores or not so good scores are relative to other working parts in the deal that you can only confirm once you’ve started your application. So if you want to buy a car but are concerned about your credit score, a little compromise in negotiations can steer you into driving your newly-purchased ride off the dealer lot.