A major concern among many car buyers is credit and they are usually wondering what is a good credit score to buy a car. When it comes time to purchase an automobile and paying cash is out of the question the most popular choice among consumer today is dealer or auto manufacturer financing. Having a dependable vehicle is no longer a luxury, but a necessity and paying for a new or used car with cash or check is rare for most people today.
The national average credit score to buy a car at the time of this writing is 692 which is lower than it was only a few years ago. However when it comes to buying a car the automobile lenders consider anything above 700 to be a good credit score to buy a car although some of the auto maker’s financing divisions require a 720 to qualify for the best rates. That is not to say that you can’t get an auto loan with an excellent rate because you can and people are doing it every day. However, typically car loan rates based on credit score are the norm across the industry. The FICO score to buy a car is not typically used unless there are special conditions. It doesn’t matter if you were thinking about new or used because used car loan rates by credit score are common. You can learn more about credit bureaus and score at USA.gov.
A Good Credit Score to Buy a Car and Tiers
Credit Score: 720-849 – A score that falls into this range is considered excellent by automobile lenders and you will qualify for the best rates and longest terms. You will be entitled to any programs and special incentives that the auto maker or lending institution may have available and a down payment is rarely required. Lenders want to lend you money to purchase a car. Obviously this is the ideal credit score for buying a car, but not everyone has such a score.
Credit Score: 680-719 – This is recognized by most auto lenders to be a good credit score to buy a car. Some banks, credit unions and automobile manufacturer’s finance departments may require a 700 score to get the best finance incentives, but most of them will include anyone with a 680 score or above. Buying a car with fair credit falls in this range, but to most auto lenders it’s still a good credit score to buy a car.
Credit Score: 620-679 – Some creditors believe this to be a good credit score to buy a car, but for many of the auto lenders a score under 680 does not qualify the car buyer for the best rates. A person can still buy and finance a vehicle, but their interest rate may be a couple of points higher and the term of the loan may be restricted to a shorter period or require a down payment. Often the car makers offer a rebate in lieu of special financing rates to compensate and reduce the cost of financing. Today this is the average credit score to buy a car in most areas.
Credit Score: 580-619 – No matter who the lender this is considered a poor credit score. It doesn’t matter if you are buyimg a car or anything else. There are still financial institutions that will lend you money to purchase a vehicle, but you will pay a premium price when it comes to the interest rate on your car loan. Typically you will be required to make a down payment and the term limit will be 60 months or less depending on the vehicle, price paid, down payment and credit history. Sometimes the only auto lender that may approve you for the loan is a sub-prime lender that specializes in car loans for people with poor credit.
Credit Score: 500-579 – The minimum credit score to buy a car falls in this range. When your credit score is in this range lenders are hesitant to grant you a car buying loan. There are lenders that will, but they are sub-prime lenders and a down payment of some kind is required. They limit the amount they will lend based on your income and down payment. These types of auto loans are usually reviewed on a case by case basis that also looks at your credit history. I have seen many people buy and finance cars with a credit score in this range, but their interest rate was always double digit and they were required to put down $1500.00 or more depending on the vehicle, mileage of vehicle financed and the length of time on their job.
Credit Score: 300-499 – This is not a good credit score to buy a car. In fact this is a bad to very bad credit score and sometimes the best option for buying and financing a car is at one of the many Buy Here Pay Here car dealers scattered across the country. They specialize in low credit score car buying and financing. They have what is commonly called in house financing. This is where the car dealer finances them and the payments are typically made on a weekly basis right where they bought their vehicle.
Do You Have a Good Credit Score to Buy a Car?
After going over the above credit tiers you should have pretty good idea of what is a good credit score to buy a car. Having an automobile at your disposal is a necessity today and therefore there are options for buying a car no matter what your credit standing. Knowing your credit score is one way of avoiding any car dealer scams and paying too much. There are also ways to repair your credit that can save you thousands of dollars on your car loan. Having a good credit score for buying car is critical to getting the car you want at a rate you can afford.
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