Can I Buy a Car With a 678 Credit Score?

Purchasing a car involves understanding how your creditworthiness influences financing options. A 678 credit score is a common reference point for individuals exploring auto loan possibilities. While important, it’s one of several elements lenders consider. This article clarifies what a 678 credit score means for auto financing and outlines additional factors shaping lending decisions, guiding you to secure a car loan.

What Your 678 Credit Score Means for Auto Loans

A 678 credit score positions you favorably for auto lending. This score falls within the “Good” range (670 to 739) according to the FICO scoring model. Lenders perceive individuals with a score in this range as moderate credit risks, indicating responsible debt management. This means the likelihood of securing approval for an auto loan is high.

While approval is likely, interest rates with a 678 score are competitive but not the lowest available to borrowers with “Very Good” or “Exceptional” credit. In early 2025, new car loans for borrowers in the “Prime” category (661-780) averaged 6.70% to 6.87%. Used car rates for this tier were approximately 9.06% to 9.36%, compared to an overall average used car rate of 11.87%. This score helps secure more favorable terms than those with “Fair” or “Poor” credit.

Key Factors Lenders Evaluate

Beyond your credit score, lenders assess other elements to determine your eligibility and loan terms. A steady income and employment history are key considerations. Lenders verify income through recent pay stubs, tax returns for self-employed individuals, or by examining bank statements. They may also contact employers directly. This process ensures you have the financial capacity to meet monthly loan obligations.

Your debt-to-income (DTI) ratio is another metric. This ratio calculates the percentage of your gross monthly income dedicated to existing debt payments, including credit cards, mortgages, and student loans. A lower DTI ratio indicates a better balance between earnings and debt, signaling sufficient disposable income for a new car payment. Many lenders prefer a DTI of 43% or lower, though some may approve loans with a DTI up to 50%.

Your down payment influences lender decisions. A larger down payment reduces the principal amount borrowed, leading to lower monthly payments and less interest paid. It also decreases lender risk, potentially qualifying you for better loan terms and a lower interest rate. A substantial down payment, often recommended at 10% for used cars and 20% for new vehicles, can also help prevent owing more than the car’s worth as it depreciates.

The loan term and vehicle type or price also play a role. Longer loan terms offer lower monthly payments but result in higher total interest paid. Lenders consider the vehicle’s value relative to the loan amount and its depreciation rate, especially for used cars which have higher interest rates. The depth and diversity of your credit history, including account longevity and credit types, can further assure lenders of your financial responsibility.

Steps to Securing a Car Loan

Before shopping for a vehicle, preparatory steps can streamline the car loan process. Review your credit reports from all three major credit bureaus. You can access these reports weekly for free through AnnualCreditReport.com. Checking your reports allows you to identify and dispute inaccuracies, which can improve your credit standing and strengthen your loan application. Understanding your credit report provides insight into the terms you might expect from lenders.

Next, determine a realistic budget encompassing all car-related expenses, not just the monthly loan payment. Beyond principal and interest, consider costs like auto insurance premiums, fuel, routine maintenance, and applicable taxes, title, and license fees. Financial experts advise that total car-related expenses should not exceed 15% to 20% of your monthly take-home pay. This approach helps ensure the car remains affordable throughout ownership.

Obtaining pre-approval from multiple lenders—banks, credit unions, and online financiers—is a good move before visiting dealerships. Pre-approval provides a clear understanding of the loan amount, interest rate, and terms, allowing you to shop like a cash buyer. Applying for pre-approval from several sources within a concentrated timeframe (14 to 45 days) minimizes credit score impact, as multiple inquiries for the same loan type are treated as a single inquiry. This step provides negotiation power at the dealership, as you have a financing offer in hand.

With pre-approval and a budget established, shop for a car aligning with your financial parameters. Focus on vehicles fitting your pre-approved loan amount and overall budget, considering purchase price and ongoing ownership costs. When ready to finalize, compare all loan offers, focusing on the annual percentage rate (APR), total interest paid, and monthly payment. Evaluating these factors, rather than just the monthly payment, ensures you select the best loan for your situation.