What Does Your Credit Score Have to Be to Get a Car?

Securing an auto loan is a common step for many purchasing a vehicle. A credit score summarizes a borrower’s financial history, offering lenders a rapid assessment of their debt management ability. No single minimum credit score is universally mandated for a car loan, but certain credit score ranges provide access to more favorable loan terms. Understanding how lenders evaluate credit and other financial factors helps navigate the car financing process.

Understanding Auto-Specific Credit Scores

When evaluating a car loan application, lenders often utilize specialized credit scores that differ from general-purpose scores consumers typically monitor. Industry-specific scores, such as FICO Auto Scores, more accurately predict a borrower’s likelihood of repaying an auto loan. While standard credit scores like FICO Score 8 or VantageScore 3.0 range from 300 to 850, FICO Auto Scores typically range from 250 to 900.

FICO Auto Scores emphasize past automotive credit history, including previous car loan payments or repossessions. This specialized focus allows auto lenders to gain a more precise understanding of a borrower’s risk profile within vehicle financing, providing a targeted prediction of their capacity to fulfill obligations.

Credit Score Tiers and Car Loan Access

An applicant’s credit score directly influences car financing terms and accessibility. Lenders categorize credit scores into tiers, each associated with different approval likelihoods and interest rates. While a car loan is possible with a lower credit score, the financial implications, particularly regarding the annual percentage rate (APR), can be substantial.

Applicants in the Super Prime tier (781-850) are highly probable for approval and receive the most competitive interest rates. As of Q1 2025, new car loans for this group averaged 5.18% APR, and used car loans averaged 6.82%. Borrowers in the Prime tier (661-780) also experience strong approval rates with favorable terms, with new car APRs averaging 6.70% and used car APRs around 9.06%. These tiers represent the majority of auto loan approvals, indicating a score of 661 or higher significantly improves financing prospects.

Moving to the Near Prime tier (601-660), securing a loan remains feasible, though interest rates increase (new car 9.83% APR, used 13.74%). For individuals in the Subprime tier (501-600), loan approval is more challenging, and borrowing costs rise considerably (new car 13.22% APR, used 18.99%). The Deep Subprime tier (300-500) faces the most significant hurdles, with average new car APRs of 15.81% and used car APRs of 21.58%. Despite these higher costs, obtaining a loan in these lower tiers is possible, though lenders may require additional assurances.

Loan terms, or the repayment period, vary by credit tier. While common car loan terms range from 36 to 84 months, some extend up to 96 months. Borrowers with lower credit scores often opt for longer terms to reduce monthly payments. However, a longer loan term typically results in paying significantly more in total interest over the loan’s life, even if the monthly payment is lower. In Q1 2025, the average new car loan term was 68.63 months, and for used cars, 67.22 months.

Additional Factors in Loan Approval

A credit score provides a foundational assessment, but it is not the sole determinant for car loan approval. Lenders conduct a comprehensive evaluation of an applicant’s financial situation to gauge their capacity to repay the loan. This holistic review incorporates several other elements that influence both approval and final loan terms.

An applicant’s income and employment stability are scrutinized. Lenders require proof of consistent income through documents like recent pay stubs, W-2 forms, or tax returns. They also consider current job length, as stable work history indicates a reliable income stream. This information helps lenders determine if earnings are sufficient to cover proposed monthly car payments and existing financial obligations.

The debt-to-income (DTI) ratio is another important metric. This ratio compares an applicant’s total monthly debt payments to their gross monthly income. A lower DTI ratio, typically below 40%, suggests sufficient disposable income to manage an additional loan. A higher ratio may indicate financial strain, making lenders hesitant to approve further credit.

A down payment significantly impacts loan approval and terms. A substantial upfront payment reduces the total amount borrowed, lowering the lender’s risk. A down payment, often 10% to 20% of the vehicle’s purchase price, can lead to more favorable interest rates and better loan offers. It demonstrates financial commitment and reduces the likelihood of owing more than the car is worth (negative equity).

The vehicle itself also plays a role in the approval process. Lenders assess the age, mileage, and type of car being financed. Newer vehicles with lower mileage often present less risk, as they retain value more effectively, providing better collateral. Lenders generally require proof of insurance for the financed vehicle to protect their investment.

If an applicant’s credit or income is insufficient for approval, a co-signer with stronger credit can improve loan chances. The co-signer’s creditworthiness provides additional assurance for the lender. However, the co-signer becomes equally responsible for the debt, meaning their credit is affected if payments are missed.

Preparing for and Submitting a Car Loan Application

Effective preparation can streamline the car loan application process and lead to more favorable terms. Before engaging with lenders, check your credit score. This provides a realistic understanding of your credit standing and available loan terms.

Gathering necessary documentation in advance is a practical step. Lenders typically require several forms of identification and financial proof. This includes a valid driver’s license, proof of income (e.g., pay stubs, W-2s, bank statements), and proof of residency (e.g., utility bill, lease agreement). Your Social Security number is also required for credit checks, and if a specific vehicle is being considered, its VIN, make, model, and year will be needed.

When submitting an application, applicants have two primary avenues: seeking pre-approval from a bank or credit union, or applying for financing directly through a dealership. Obtaining pre-approval from a financial institution before visiting a dealership provides a significant advantage. Pre-approval involves a tentative loan offer based on a credit check and financial review, providing a clear understanding of the qualified loan amount and interest rate. This empowers the borrower to negotiate the vehicle’s price with the dealership, knowing financing is already secured.

Dealership financing offers convenience, as the dealership acts as an intermediary, submitting applications to various lenders on the buyer’s behalf. While this can result in faster approvals, dealership interest rates may sometimes be higher due to potential markups. Compare any pre-approved offers with those presented by the dealership. When multiple loan applications are made within a short timeframe (e.g., 14 to 45 days), credit scoring models typically group these inquiries as a single event, minimizing credit score impact. After submission, lenders review all provided information to assess financial stability and determine final loan eligibility and terms.