What credit score do I need to buy a car?

  • What credit score do I need to buy a car?
22 May, 2023
Daniel Cohen
11 min
what credit score need to buy a car

Your credit score will affect your interest rates

Discover how high your credit score should be before you begin to buy a car.

Depending on your daily activities, you might need access to a vehicle. Sometimes, it might not even be a necessity; you just want to have something to drive to get you where you want to be. Whichever the case, if you have enough money saved to buy the car, ideally you simply head to the dealership, make your choice, and pay cash.

But what if you don’t have enough money to pay cash for the car?

In this case, you’ll need an auto loan. This is where your credit health matters. The auto lender will pay attention to your credit report and credit score to ascertain your creditworthiness. Lenders will also consider your income and debt-to-income ratio. These help them decide what kind of terms to give you for your auto loan.

This begs the question, “What is a good credit score to have when I want to buy a car?”

Read on to find out.

The various categories of car buyers according to credit score

Auto lenders normally group auto loan applicants into different categories depending on their credit scores. Since your credit score is a numerical representation of your general financial situation and habits, it helps them make their decisions.

Here are the various categories of car buyers according to their credit scores:

  • Super prime: 781–850  
  • Prime: 661–780
  • Non prime: 601–660
  • Subprime: 501–600
  • Deep subprime: 300–500

Naturally, some credit scores are considered good. However, at this point, it’s imperative to observe them from an auto loan perspective. To accomplish this, let’s pay attention to the implication of each category.

According to Experian’s analysis of auto loans, borrowers in the deep subprime category have an average interest rate of 14.97%, while those in the subprime group have average interest rates of 12.42%. Borrowers in the non-prime category have average interest rates of 8.08%.

However, borrowers in the prime and super-prime groups have rates of 5.12% and 4.2% respectively.

It’s worth noting that the interest rates are not set in stone; they change with time and depend on the prevalent market conditions.

All the same, the data reveals some important details, including the following:

  • A good credit score for buying a car is 661 and up.
  • The better your credit score, the lower your interest rate.
  • There’s no minimum credit score needed to qualify for an auto loan, so even people with very low credit scores can get auto loans.

So if you have a good credit score and you need an auto loan, get on with your application. However, if your credit score is currently low, all hope isn’t lost. Take the necessary steps to build your credit by avoiding things that cause your credit score to drop. This will open the door to better interest rates and more favorable terms.

You’ll be glad you did!

About the author
Daniel Cohen
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Daniel Cohen is a Founding Partner of Consumer Attorneys and a co-chair of Consumer Finance Litigation practice. Since 2017, he is a member of the National Association of Consumer Advocates and the National Consumer Law Center. Mr. Cohen is a nationally-recognized practitioner of consumer protection law. He has a wealth of proven legal experience in the US in: collective claims, representing visually impaired people who believe their rights under the Americans with Disabilities Act have been violated in both the physical and digital environments, corporate governance and dispute resolution. Read more

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