What Car Can I Get With a 650 Credit Score?

A 650 credit score is considered “fair” or “nonprime.” This score indicates a moderate level of creditworthiness, signaling to lenders that financing opportunities remain accessible despite some risk. Understanding what a 650 credit score signifies is foundational for navigating the auto loan market, as it influences the terms and conditions a borrower might encounter. This credit standing allows for various financing options, though they may differ from those available to borrowers with higher scores.

How Lenders View a 650 Credit Score

Lenders categorize credit scores to assess a borrower’s risk level. A 650 score falls into the “nonprime” range (601-660). This suggests a moderate risk, impacting loan approval likelihood and interest rates. Lenders use credit scores to indicate how reliably a borrower has managed past debts and their likelihood to repay a new loan.

For borrowers with a 650 credit score, average auto loan interest rates in Q1 2025 were around 9.83% for new cars and 13.74% for used cars. These rates are higher than for “prime” credit scores (661-780), who experienced rates closer to 6.70% for new cars and 9.06% for used cars during the same period. Higher interest rates reflect the lender’s perception of increased risk and result in a greater total cost over the loan’s life.

For “subprime” borrowers (501-600), average rates were 13.22% for new cars and 18.99% for used cars, illustrating the tiered nature of auto financing. While a 650 score doesn’t unlock the lowest rates, it positions borrowers more favorably than lower scores. A lender’s decision is not solely based on the credit score, but it remains a primary determinant in structuring loan terms.

Key Elements Beyond Your Score

Lenders consider several factors beyond a credit score when evaluating an auto loan application. These elements offer a comprehensive view of a borrower’s financial health and repayment capacity. Focusing on these areas can improve loan terms.

Consistent and sufficient income, coupled with stable employment, is a primary concern for lenders. They need assurance that a borrower can make regular loan payments. Lenders often request recent pay stubs, W-2 forms, or tax returns to verify income, and may also confirm employment status and length of time at a current job.

The debt-to-income (DTI) ratio is calculated by dividing total monthly debt payments by gross monthly income. A lower DTI indicates a greater capacity to handle additional debt. A DTI below 36% is generally favorable, though some lenders approve up to 45-50% if other factors are strong.

A substantial down payment reduces the loan amount and minimizes lender risk. A larger down payment often leads to better interest rates and approval odds. A down payment of at least 10% for used vehicles and 20% for new vehicles is often suggested, though any upfront payment is beneficial.

Trading in an existing vehicle can function similarly to a cash down payment, directly reducing the amount financed. Including a co-signer with a stronger credit history can bolster an application, increasing approval likelihood and potentially securing more favorable interest rates. The co-signer assumes legal responsibility for the loan if the primary borrower defaults.

The type and age of the vehicle also factor into lending decisions. Newer cars often qualify for lower interest rates due to better value retention, reducing lender risk. Used vehicles, especially older models, may have higher interest rates due to higher perceived risk and faster depreciation.

Navigating the Car Buying Process

Purchasing a car with a 650 credit score involves strategic steps to secure the best financing terms. Beginning with pre-approval sets a clear financial framework, allowing for a focused shopping experience. This initial step helps borrowers understand their budget and potential loan conditions before engaging with dealerships.

Seeking pre-approval from multiple lenders (banks, credit unions, online lenders) is recommended. Pre-approval provides a conditional offer, detailing the maximum loan amount, estimated interest rate, and loan term. This process involves a “hard inquiry” on your credit report, which can temporarily affect your score, so complete this step when serious about purchasing. Lenders generally require documentation such as proof of identity, income verification (e.g., pay stubs, W-2s), proof of residence, and employment information.

With pre-approval, car shopping becomes more informed, as you know your precise budget. This empowers you to focus on vehicles aligning with your approved loan amount. When considering a vehicle, remember that the age and type of car can influence the final loan terms, even after pre-approval.

Negotiating the vehicle’s price and loan terms is crucial, and pre-approval offers significant leverage. Dealerships may offer their own financing, but external pre-approval allows you to compare and negotiate for the most favorable interest rate. Always focus on negotiating the total “out-the-door” price of the vehicle, rather than just the monthly payment, to understand the true cost.

When finalizing the loan and purchase, carefully review all documents before signing. Pay close attention to the Annual Percentage Rate (APR), which encompasses the interest rate and any additional fees, representing the total cost of borrowing. Ensure the agreed-upon terms, including the loan duration and any down payment or trade-in credits, are accurately reflected in the final contract.