What Credit Score Do You Need for a Car Loan?

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Key takeaways

Most lenders prefer a credit score of 661 or higher, but you can still receive approval with fair or poor credit.
Building credit before buying a car can lower your interest rate and save you thousands.
You can increase your chances of approval by making a larger down payment, adding a cosigner, or choosing an affordable vehicle.

Buying a car is exciting, but figuring out if your credit score is high enough to qualify for a loan can be stressful. Your credit score plays a significant role in whether lenders approve your application and what interest rate you get. A report from Experian in Q2 2025 found that 70% of consumers who financed cars had credit scores of 661 or higher.

While 661 is a decent credit score for a car loan, you can qualify for financing with a lower score. Although you may have to take a few extra steps and pay a bit more in interest, exist.

What is the minimum credit score for a car loan?

There is no specific minimum credit score needed for a car loan. All lenders – banks, credit unions, online lenders, dealerships, and auto finance companies – have different standards and set their own minimum score requirements. Most lenders prefer borrowers with good credit. A score of 661 or higher on the VantageScore scale or above 670 for FICO scores qualifies as good or prime credit.

A lower credit score will not necessarily keep you from securing a car loan. Some lenders have lenient minimum requirements. They may be willing to accept a lower score if you’re borrowing less, adding a cosigner, or making a larger down payment.

Experian found that borrowers in the subprime range, VantageScores of 501-600, accounted for 13.22% of cars financed. Deep subprime borrowers (300-500) accounted for only 1.89%. You can finance a vehicle with a less than ideal credit score, but you’ll pay more in interest.

Anyone can finance a car.

Average auto loan interest rates by credit score

Your credit score affects the interest rate the lender offers you. Knowing the can help you figure out what you might pay each month. Borrowers with excellent credit typically receive the best rates, often as low as 5.27% for new cars.

Here is a table depicting what you can expect to pay in interest by credit score.

Credit score range	New car average APR	Used car average APR
Superprime: 781-850	5.27%	7.15%
Prime: 661-780	6.78%	9.39%
Nonprime: 601-660	9.97%	13.95%
Subprime: 501-600	13.38%	18.90%
Deep subprime: 300-500	15.97%	21.58%

Source: Experian, Q2 2025; VantageScore^® 4.0 used

Your credit score can significantly impact how much you pay for your car. For instance, say you have a high credit score and receive a 5.27% APR on a $25,000 loan repaid over six years. Your monthly payment would be $406, and you’d end up paying $4,214.85 in interest.

Now, if your score falls in the subprime category, you may receive a 13.38% APR on the same car loan. In this case, you’d end up paying $507 per month and approximately $11,496 in interest over the life of the loan. The low credit score could cost you $7,280 in interest for the same car.

How to get an auto loan with less than ideal credit

You can get a car loan even with imperfect credit, but this will limit your options and increase your costs. First, consider whether buying a car now is essential or if you can wait and improve your score. If you can’t wait, take a few extra steps to increase your chances of approval at a better interest rate.

1. Check your credit

Before you start shopping for a car, review your credit report and check your credit score. This helps you understand where you stand and what lenders will see when you apply. If there are errors, like accounts that aren’t yours or incorrect late payments, dispute them with the credit bureau. Even a slight boost to your score can make a difference in your loan approval and interest rate.

2. Save for a bigger down payment

A larger down payment shows lenders you’re committed to the purchase and reduces the amount you need to borrow. Aim for at least 10%–20% of the car’s purchase price to reduce the loan amount.

A smaller loan offsets some of the risk lenders take on when approving borrowers with low scores. In turn, they may offer you a lower interest rate.

Even if you don’t get a lower APR, borrowing less will lower your monthly payments. In the end, you’ll pay less interest over the life of the loan.

3. Show financial stability

Lenders want reassurance that you can handle the debt. Showing financial stability will reassure them that you can repay the loan.

Bring in proof of income, such as pay stubs, tax returns, or bank statements. Presenting consistent income and a low debt-to-income (DTI) ratio can help offset a lower credit score.

4. Research lenders

Lenders have different minimum credit score requirements. Research lenders to find ones that work with borrowers in your score range. Consider credit unions, local banks, and online lenders, as well as dealership financing.

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5. Prequalify with several lender

Once you’ve found several potential lenders, see if you can check eligibility without affecting your score with them. Prequalification lets you see potential loan terms without affecting your credit. Then compare estimated interest rates, fees, and monthly payments.

Shopping around with multiple lenders can help you identify the best offers. You can then take a prequalification letter to the dealership to strengthen your negotiating power.

6. Add a cosigner

Consider asking a trusted friend or family member with good credit to cosign the loan. Adding a cosigner lessens the risk for the lender, and so they may offer you a loan with better terms.

Keep in mind that the cosigner is equally liable for the debt. Be sure you can make the payments on time to protect their credit.

7. Consider trading in an old car

If you have a vehicle you no longer need, trading it in can reduce the total amount you need to borrow. The trade-in value acts like an additional down payment and can make it easier to qualify for financing. Be sure to get multiple appraisals, both online and in person, so you receive the best possible offer.

8. Choose an affordable vehicle

Be realistic about what you can afford. A reliable, moderately priced car may be a better choice than stretching your budget for a luxury model.

Choosing a vehicle with a lower purchase price means you’ll need to borrow less. A smaller loan is less risky for the lender. You’ll have a higher chance of approval and manageable monthly payments.

Auto loan interest rates too high?

Tips for building credit before buying a car

If possible, take a few months to improve your score and qualify for a better car loan. before purchasing a vehicle could save you hundreds or even thousands of dollars in interest.

The exact steps you need to take depend on your situation, but here are the basics you should work on:

Pay bills on time: Payment history is the most significant factor in determining your credit score. Always prioritize paying on time.

Reduce your credit card balances: Credit utilization is the second most prominent factor in calculating your score. Aim to keep your balances under 30% of your limit – under 10% will help improve your score faster.

Delay other credit applications: Every time you apply for credit, the lender conducts a hard inquiry. Hard inquiries drop your score by a few points. Avoid applying for other credit within six months of an auto loan application to protect your score.

Keep your cards open: Try not to close credit cards, unless they have high fees. Keeping your cards open increases the average age of your credit history. Lenders prefer a longer history as it gives them more data to review.

Address collection accounts: If you have an account in collections, pay it off as soon as possible. A paid-off collection account should improve your payment history.

Become an authorized user: Ask a friend with good credit if they can add you as an authorized user on their account. Being added means their positive credit history is added to your report, boosting your score.

Taking even a few months to improve your credit can help you qualify for better rates. You may be able to reduce your monthly payments and make owning a car more affordable.

Does buying a car help your credit?

Financing a car can help build credit, as long as you manage the loan responsibly. The lender will report your payments to the three major credit bureaus. Making on-time payments every month can improve your payment history, which in turn can boost your score.

An auto loan can also diversify your credit mix by adding an installment account if you’ve only had credit cards. Lenders prefer it when consumers show they can responsibly handle different types of debt. Adding an installment loan and paying it off as agreed can raise your score.

While financing a car can help you build credit, missing payments or defaulting will hurt your score. Before you take out a loan, make sure that you can afford the monthly payments.

Frequently asked questions

1. Can I buy a car with no credit?

You can buy a car with no credit, but you will either need to pay the full price in cash or secure a cosigner. Adding a cosigner with a good credit history reduces the lender’s risk, making them more willing to work with you.

2. Can I get a car with a 600 credit score?

Yes, many lenders typically consider a 600 credit score as fair credit and will approve you for an auto loan. You will likely receive less favorable terms, including a high interest rate.

3. What is a good credit score for a car loan?

A good credit score when applying for a car loan is typically 700 or higher. A score in this range will help you qualify for the best interest rates and terms. That said, many lenders approve loans for borrowers with scores in the mid-600s.

4. Can I get a car loan with a 500 credit score?

Yes, car loans for a 500 credit score exist, but expect higher interest rates and stricter terms. These loans are often available through subprime lenders or special financing programs at dealerships. Making a larger down payment, showing proof of steady income, and choosing an affordable vehicle can improve your chances of approval.

Bottom line

You can absolutely finance a car with less-than-perfect credit. Specific lenders are willing to work with borrowers in the subprime range. You may need to show stable finances, make a larger down payment, or add a cosigner, but you can find approval.

The catch is that the lender will charge a higher interest rate, and your loan will cost more. A better option is to wait a few months and improve your score.

Taking the time to strengthen your credit before applying for financing puts you in a better position and can make car ownership more affordable.

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Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor's credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor's degree in journalism and an MBA.

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What Credit Score Do You Need for a Car Loan?

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