Can I Buy a Car With a 629 Credit Score?

Buying a car often involves securing a loan, a process where your credit score plays a significant role in determining financing options. While a 629 credit score might present challenges, it does not automatically disqualify an individual from obtaining a car loan. Understanding how lenders evaluate credit and other financial aspects can help clarify the possibilities available to a prospective car buyer.

Understanding Your Credit Score for Car Loans

A 629 credit score falls into the “Fair” or “Non-prime” category for auto lending, typically ranging from 580 to 669. Lenders may view individuals with a score in this range as presenting a higher risk, which can influence the terms of a car loan.

While approval for an auto loan is possible with a 629 score, the interest rates offered will likely be higher compared to those with excellent or good credit. For example, in 2025, average interest rates for new cars for non-prime borrowers (601-660) were around 9.83%, and for used cars, they were approximately 13.92%. This higher interest rate reflects the increased perceived risk to the lender.

Other Factors Lenders Consider

Beyond a credit score, lenders assess several other financial indicators to determine an applicant’s ability to repay a car loan. A steady income and stable employment history are important, as they demonstrate consistent repayment capacity. Lenders often look for proof of income through recent pay stubs, W-2 forms, or tax returns to verify financial strength.

Another significant factor is the debt-to-income (DTI) ratio, which compares monthly debt payments to gross monthly income. Lenders generally prefer a DTI ratio below 36%, indicating that a borrower has sufficient income remaining after existing obligations to manage a new car payment. Some lenders might approve applications with a DTI up to 43% or even 50%, though this can vary.

Making a substantial down payment can also significantly improve loan approval chances and terms. A larger down payment reduces the amount borrowed, leading to lower monthly payments and less interest paid over the loan’s duration. It also demonstrates commitment to the purchase and can help avoid negative equity, where the loan balance exceeds the car’s value. Experts often suggest a down payment of at least 20% of the vehicle’s purchase price.

The specific vehicle chosen and the desired loan term also factor into a lender’s decision. Lenders consider the car’s age, mileage, condition, and potential resale value. Shorter loan terms typically come with lower interest rates but higher monthly payments, while longer terms may offer lower payments but accrue more interest over time.

Preparing for Your Car Loan Application

Before formally applying for a car loan, taking preparatory steps can improve your chances of approval and help secure more favorable terms. Begin by checking your credit report from each of the three major nationwide credit reporting companies through AnnualCreditReport.com. Review these reports carefully for any errors or inaccuracies, such as incorrect late payments or accounts that do not belong to you, and dispute them promptly.

It is helpful to determine a realistic budget for your car purchase, considering not only the monthly car payment but also associated costs like insurance, fuel, and maintenance. Saving for a down payment is also advisable, as a significant down payment can reduce the loan amount needed, lower monthly payments, and potentially secure a better interest rate.

Consider getting pre-approved for an auto loan from banks or credit unions before visiting a dealership. Pre-approval provides a clear understanding of how much you can borrow and at what interest rate, empowering you with a stronger negotiating position at the dealership. While pre-qualification typically involves a “soft” credit inquiry that does not affect your credit score, pre-approval usually involves a “hard” inquiry that may slightly impact it.

Gathering necessary documents in advance can streamline the application process. Lenders commonly require:
Proof of identity, such as a driver’s license or passport.
Proof of residence, like a utility bill or lease agreement.
Proof of income, which can include recent pay stubs, W-2 forms, or tax returns.
Proof of current auto insurance.

Navigating the Application Process

Once preparations are complete, the next step involves navigating the application process itself. Car loan applications can be submitted through various channels, including dealership finance departments, local banks, credit unions, or online lenders. Each option may offer different interest rates and terms, making it beneficial to explore multiple avenues.

When submitting your application, ensure all required information and documents are accurately provided. Lenders will use this information to assess your creditworthiness and determine loan eligibility. After applying, you may receive several loan offers.

Carefully compare each offer, focusing on the interest rate, the loan term, and the total cost of the loan over time. A lower interest rate can significantly reduce the overall amount paid, even if the monthly payment difference appears small. Once an offer is selected, the final step involves signing the loan documents and taking possession of the vehicle.

Exploring Alternative Options

For individuals who find it challenging to secure a traditional car loan with favorable terms due to a 629 credit score, several alternative options exist.

Applying with a co-signer can significantly improve approval chances and potentially lead to a lower interest rate. A co-signer, typically someone with a stronger credit history, agrees to be responsible for the loan if the primary borrower defaults, providing additional assurance to the lender.

Considering a less expensive vehicle can also make securing a loan more feasible. A lower purchase price reduces the loan amount needed, which can ease qualification requirements and result in more manageable payments. This approach minimizes the risk for lenders and can lead to better loan terms.

Another strategy involves actively improving your credit score before reapplying for a loan. This can be achieved by consistently paying all bills on time, which is a significant factor in credit scoring. Reducing existing debt, particularly credit card balances, to keep credit utilization low can also positively impact your score. Avoiding new credit applications during this period can also prevent further inquiries from temporarily lowering your score.

Finally, “buy-here-pay-here” dealerships offer financing directly to consumers, often without extensive credit checks. While this option can be accessible for those with lower credit scores, it typically comes with much higher interest rates, often ranging from 15% to 20% or even higher. These dealerships may also have stricter payment schedules, such as weekly or bi-weekly payments, and a higher risk of repossession if payments are missed.