What credit score do I need for a car loan?
I’m trying to buy a new car but my credit score isn’t that great. I can hold off for another year, but my current car is definitely on its last leg. What’s the lowest credit score you can have and still qualify for a car loan?
You can get a car loan with a credit score as low as 300. However, to get the best deal on a loan, you would ideally want to have fantastic credit or make a very large down payment on the vehicle.
Your credit determines the APR of the loan, which encompasses the interest rate and extra fees. The higher your credit score, the lower the APR and the less you’ll have to pay each month.
Interest rates on newer cars are typically lower than interest rates on loans to buy used cars—so you’ve got that working in your favor. This is because lenders see new cars as less of a risk (lower chance of breaking down, less probability the lendee will go upside down on the loan, and so on). But if your credit score is below 600, you run the risk of a high APR no matter what—and your loan application may even be denied.
A great way to work around this issue is by asking someone with a higher credit score to cosign the loan. It will up the odds that you get approved and may even qualify you for a lower interest rate.
After making several on-time loan payments and improving your credit score, be sure to check out the Jerry app to refinance your loan and save on monthly payments.
Jerry removes the hassle by giving you one app that instantly connects you with top companies to meet your financial needs. Make sure you’re not overpaying for your car loan by comparing offers from multiple lenders to find the best option for you.
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