What Auto Interest Rate Can I Get With a 650 Credit Score?

When financing a vehicle, understanding how lenders evaluate your financial standing is crucial. An auto loan allows you to borrow funds to purchase a car, which you repay over a set period, typically with interest. Your credit score is a primary indicator to lenders of your creditworthiness and repayment history. This numerical representation helps determine the risk associated with lending you money, directly influencing the interest rate you are offered. Knowing your credit score and its implications can help you navigate the auto loan market more effectively.

Understanding Your 650 Credit Score for Auto Loans

A 650 credit score places an individual in the “Nonprime” credit tier. This range, generally spanning from 601 to 660, indicates a moderate risk to auto lenders. While a 650 score is not poor, it suggests the borrower may have past credit challenges or a limited credit history. Lenders perceive individuals in this category as having a higher likelihood of default compared to those with higher scores.

Obtaining an auto loan with a 650 score is possible, but the terms may not be as favorable as those offered to borrowers with “Prime” or “Superprime” scores. Lenders compensate for the increased risk by offering higher interest rates. This balances the risk of lending with the potential for return, making the loan viable for both the borrower and the financial institution.

Additional Factors Influencing Your Auto Loan Rate

While your credit score is a significant determinant, several other elements also play a substantial role in shaping your final auto loan interest rate. The loan term directly impacts the interest charged; longer terms, such as 72 months or more, often come with higher interest rates compared to shorter terms like 36 or 48 months. This is because extended repayment periods increase the lender’s exposure to risk over time.

A larger down payment reduces the principal loan amount, which lowers the lender’s risk and can lead to a more attractive interest rate. The type and age of the vehicle being financed are additional considerations; used cars generally carry higher interest rates than new vehicles, as they are perceived as having a higher depreciation risk and potential for mechanical issues.

Your debt-to-income (DTI) ratio, calculated by dividing your total monthly debt payments by your gross monthly income, is another factor. Lenders use this ratio to assess your capacity to take on additional debt; a lower DTI indicates greater financial flexibility and can result in better loan terms. The type of lender you choose, whether a traditional bank, credit union, or dealership financing, can influence the rates offered, as can broader market conditions such as inflation and the federal funds rate.

Expected Auto Loan Rates for a 650 Credit Score

For individuals with a 650 credit score, which falls within the “Nonprime” category, expected auto loan interest rates are higher than those for borrowers with prime credit. As of the first quarter of 2025, the average annual percentage rate (APR) for a new car loan for a credit score in the 601-660 range was approximately 9.83%. For a used car loan within the same credit score bracket, the average APR was notably higher, around 13.74%.

These rates are averages and can fluctuate based on various contributing factors. For instance, opting for a longer loan term or making a smaller down payment will likely push your offered rate towards the higher end of these ranges. Conversely, a substantial down payment or a shorter repayment period could help you secure a rate closer to the lower end. Your specific rate will depend on your complete financial profile and the lender’s individual policies.

Steps to Secure a Favorable Auto Loan

To secure a more favorable auto loan with a 650 credit score, taking proactive steps before visiting a dealership is beneficial. Obtaining pre-qualification or pre-approval from multiple lenders, such as banks and credit unions, allows you to compare offers and understand the interest rate you might expect before making a vehicle choice. Pre-qualification provides an estimate with a soft credit inquiry, while pre-approval involves a more thorough review and a hard credit inquiry, offering a more concrete loan amount and rate.

Considering a larger down payment can significantly improve your loan terms, as it reduces the loan amount and the lender’s risk. Aiming for a down payment of at least 10% for a used car or 20% for a new car is a common recommendation. Selecting a shorter loan term, such as 36 or 48 months, results in a lower interest rate, though it will mean higher monthly payments. Improving your credit score by paying down existing debts or correcting any errors on your credit report can also lead to better rates over time.

Exploring the option of a co-signer with a stronger credit profile can help you qualify for more competitive rates. A co-signer shares responsibility for the loan, reducing the lender’s risk. Being prepared with necessary documentation streamlines the application process. This includes:

• Proof of identity (e.g., driver’s license)
• Proof of income (e.g., recent pay stubs or W-2 forms)
• Proof of residence (e.g., utility bill)
• Proof of auto insurance