Your credit score plays a very important role when you apply for a car loan. Here are some tips that will help you understand the credit requirements and secure a loan regardless of your level of credit.

Credit Score and Interest

If you have a 720+ credit score, you can score between a 3.65% to 4.29% interest rate on an auto loan. The lower your score, the higher your auto loan interest rate. For those between 660 and 719, it’s between 4.68% and 6.04%. If your score drops below 579, you will be charged 14.39% and 20.45%. That’s how important your credit score is.

Credit Score Check

There are three major credit bureaus that issue credit data, and there are dozens of credit scores based on this data. There are also many different versions of FICO scores like Bankcard Score and Auto Score. So it’s possible that you and the lender may be checking your credit score from different sources. Even free credit scores that are called educational scores are different from your actual score. This could make things complicated because you may be checking one score, and the lender may be considering another.

Down Payment

Zero down payments have become very common. But, you can help your application by offering 10% to 20% of the car price as a down payment. You could even include the trade-in value of your current car and a cash rebate from the dealer. In these cases, you’ll be borrowing less, and the lender will offer better terms because you’re reducing their risk.


If your credit or income doesn’t qualify you for an auto loan, you should bring in a qualified co-signer who has strong credit and generous income. It can strengthen your application if someone agrees, and you may get reasonable terms too.

High-Rate Loan

People with poor credit get offered expensive loans. Your monthly payments will be higher, and you’ll pay thousands in interest over the life of the loan. In that case, consider not buying a car. If you’re already stuck in a high-rate loan, you can sell the vehicle and pay off the loan.