What is the Minimum Credit Score for an Auto Loan?

August 6th, 2010 | Author:

Despite the fact that the economy is slowly recovering from the recent recession that was brought about by bad credit decisions, the credit requirements for most loans still remain tight. This means it will be very difficult to find car loans, let alone those with favorable interest rates if your credit score is below average. Therefore it is important to consider the minimum credit score for an auto loan before pushing through with the loan.

The credit score needed for an auto loan varies with each lender. However, a credit score in the range of 500 to 579 is generally considered bad credit because 500 is the average minimum credit score for an auto loan. It will be extremely difficult to find a bank, or a credit or financing company willing to lend you money for the loan. In rare cases, a car loan may be approved but it will surely be beyond favorable rates, often times even reaching the maximum interest rate legally allowed in the state.

It is highly discouraged to push through with the loan if you have the minimum credit score for an auto loan. Due to the very high amount a borrower will have to pay when choosing to push through with a car loan, it is advisable to choose a second hand car instead to save on interest payments. This will result to lower monthly payments which at first may seem insignificant but will really be a lot cheaper in the long run. Even still, a better choice will be to give up on planning for the car loan altogether until your score goes well beyond the credit score needed for an auto loan.

Meanwhile, having a credit score in the range of 580 to 619 will be considered minimal but fairly acceptable. It will be very unlikely that you will find a lender who can offer you a traditional loan with acceptable rates. In fact, just like having the minimum credit score for a car loan, there will still be a huge probability that the interest rates will be the maximum allowed by the state.

A borrower with a credit score above 620 will not have to worry about finding lenders who are willing to offer traditional loans with acceptable interest rates. Although the interest rate is still high compared to interest rates for credit scores above 700, this credit score is still the recommended credit score for people looking for car loans fast.

As a general rule, it should be remembered that a bad credit score will guarantee higher interest rates. This is true if your score is the minimum credit score for an auto loan. Likewise, choosing a longer payable period will result in a higher total payment. For optimum savings, it is recommended to postpone the car loan until your credit score reaches 620 and choosing a shorter paying period.

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 »