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.
[I]f you made a resolution this year to pay off debt and improve your credit, you may find you have a challenge. For some, getting a second job is the best way to accomplish this goal because it provides extra income. If this isn’t an option, you can focus instead of saving money to give […]
[I]f you have bought a home recently, are in the process or plan to in the future, one of the options you may have is to purchase a home warranty. However, you will have to decide if having a warranty is worth the initial cost. What is a Home Warranty? A home warranty covers your […]
[F]or many, health insurance is a cost they can’t afford. Premiums have gone up and co-pays are often higher as well as deductibles. If you have decided that you just can’t have health insurance, be aware of what it may really cost you. Major Health Issues As long as you are healthy, not having health […]
[I]f you already work a second job or have kids and no option to take on part-time work, you may wonder how you will ever be able to pay off debt and improve your credit rating. Fortunately, there are ways you can earn money even when you don’t have time to fit in another job. […]
[T]he My Friend Cayla is a doll that has been making the news in a bad way. In fact, some advocate that parents get rid of the doll that has been banned in Germany. This interactive toy connects to the internet to talk with your child, answer questions and just be a lot more fun […]
[D]ebt is something most people have but very few want. Credit card debt and medical bills are especially detrimental to a person’s life and credit rating. For many, they take on a second job and devote the income to paying off debt. However, if this isn’t an option for you, there are still ways you […]
[M]ost people who spend too much know it. They run into the store for paper towels or a gallon of milk and come back with two or three bags of stuff. Every time they sit down to pay the bills and see they don’t have enough money to cover expenses, they promise never to splurge […]