What Does Your Credit Score Need To Be To Get a Car Loan?

July 17th, 2011 | Author:

At present, the average credit score for Americans is 670. However, this score is neither a bad credit score nor an excellent credit score. Lenders will always have a range of credit scores they find acceptable for the different loans and financing offers they provide. The credit score to get a car loan does not have to be high, however, it will still affect the financing and loan options for the car.

Traditional lenders will always require fair or good credit score to get a car loan. The credit score for what they consider to be acceptable credit is between 620 and 700. As always, the credit score will also determine the down payment, the interest rate, the requirement of a cosigner, or the length of the maturation period. Generally, the better the credit score of the borrower, the more attractive these options become.

If the borrower does not meet the credit score needed for a car loan from the traditional lenders, he can choose to borrow from alternative lenders instead. These lenders are smaller than traditional lenders and are generally newer and do not usually have a well established name. For these reasons, their required credit score to get a car loan is normally low.

These alternative lenders are easy to find. Among them are car dealers or manufacturers, online loan lenders, and special lenders that cater to high risk borrowers.

Of these alternative lenders, the financing agencies of car dealers or manufacturers offer the best rates. Several examples of trusted manufacturers are: General Motors Acceptance Corporation, Ford Motor Credit Company, and Nissan Motors Acceptance Corporation. The main goal of these financing agencies is to make sales. Therefore they offer lower interest rates to entice buyers. Unfortunately, the present situation in the economy has forced them to require a 620 credit score needed for a car loan.

Small lenders, especially high risk ones, will normally offer car loans for people with bad credit. However, they charge large down payments or even interest rates in return. These lenders also give large penalties for late or delayed payments.

There are even lenders that accept a 500 credit score to get a car loan. An important thing to remember about these lenders is that they have interest rates that are close to the maximum, if not the maximum, allowed by the state. This means that although the car loan will be accepted, the borrower will have a difficult time paying off the loan.

Having a credit score of above 700 will give the most attractive rates for the borrower. With these scores, the lender will usually offer interest rates that are more or less 3% yearly. This is significantly smaller compared to the 19% maximum interest rate for bad credit car loans.

The credit score to get a car loan does not need to be high if a borrower wishes to get one, however, he must always evaluate whether he does have the capability to pay off the higher interest rates.

Newest Answers

Big Changes Coming to Credit Reports

August 18th, 2017 | Author:
h

[I]f you have a bad credit score, you may benefit from the changes coming to credit reports soon. If you’re one of the lucky ones, you’ll see your credit score improve. In fact, it is expected that up to seven percent of those who have credit histories could see a benefit. What Changes Most civil […]

Continue Reading »

Be Realistic When Budgeting to Get Out of Debt

August 17th, 2017 | Author:
h

[Y]ou’re deep in debt and you want to pay it off to improve your credit score and to make life simpler. You want to pay it off as quickly as possible, which means making some major changes in your finances and life. Many experts tell you to stop spending any more money than you have […]

Continue Reading »

3 Ways You Can Waste Your Money

August 11th, 2017 | Author:
h

[I]f you’re trying to become more financially stable and improve your credit rating, you must be careful with how you spend your money. While you don’t want to give up everything fun in life in order to be frugal, you also want to avoid wasting your money on unnecessary expenses. Here are three ways people […]

Continue Reading »

Starting Over from Bad Credit

August 9th, 2017 | Author:
h

[Y]ou hit rock bottom with your credit. All of your accounts went to collections and your car was repossessed. You don’t even want to check your credit score because you know it’s bad. While the situation might seem hopeless, you can turn it around. Once you’ve lost any credit worthiness, you are ready to work […]

Continue Reading »

How to Talk to a Boyfriend/Girlfriend about Their Credit Rating

August 7th, 2017 | Author:
h

[I]f you’ve been dating someone for a while, you may be getting serious. Before you start dreaming about the perfect wedding day or what life will be like with 2.5 kids and a dog, you need to know you’re on the same page about important issues. While many people think nothing of talking about how […]

Continue Reading »

3 Ways Credit Matters to Everyone

August 4th, 2017 | Author:
h

[Y]ou pay everything with cash. Your motto is “If I can’t pay cash, I can’t afford it.” That means no credit ever. You may assume that you don’t need to worry about your credit score if you don’t plan to use credit to buy anything. Unfortunately, credit isn’t just about loans and credit cards. A […]

Continue Reading »

3 Tips to Help Your Kids When They Have Summer Jobs

August 2nd, 2017 | Author:
h

[I]f your kids are old enough to take on a summer job, now is a golden opportunity to teach them about money and finances. If you start them out right, they will know how to handle money and financial responsibility for when they are earning a full-time income. Here are three tips to use this […]

Continue Reading »