What credit scores mean for car loans


Man reviewing his credit score on a tablet
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See how credit scores affect how much you pay to finance a car or truck.           

When it comes to calculating how much you can afford for a car, there’s one factor you don’t want to overlook: your credit score. Lenders use credit scores to determine whether they should make a loan, and if so, what interest rate to charge. Keep reading to learn more about how credit scores affect car loans.

Why a higher credit score lowers car loan interest rates

Credit scores help lenders evaluate your credit worthiness. A higher credit score means a higher likelihood that a borrower will repay the loan. Borrowers with lower credit scores can still get a car loan. However, they’ll pay more interest than someone with a higher credit score.

What credit do you need to buy a car?

It’s not a matter of what credit you need to get a car loan, it’s a matter of how your credit score affects how much you pay for a loan. Since credit scores influence how much you’ll pay for an auto loan, it’s useful to understand how lenders classify them.

According to Experian, the levels break down as follows:

If your Credit Score is               Lenders Classify You As:

                579 or below                                 deep subprime

580-619                                          subprime

620-659                                          nonprime

660-719                                          prime

720 or above                                 super prime

How credit scores correlate to auto loan rates

If you have a low credit score, it doesn’t mean you won’t get a car loan. Often, you can still qualify for a loan. However, the amount you can borrow will be more limited and the interest rate you pay will be higher compared to a borrower with a higher score.

In the first quarter of 2020, Experian reports that the average new car loan rate for those with super prime credit scores was 3.65% APR. Borrowers classified as deep subprime paid 14.39% APR on average—that’s nearly four times as much as borrowers with the highest credit scores!

Head over to the Consumers Car Loan Calculator* to see how much of a difference your rate matters to your payments! The difference between 3.65% APR and 14.39% APR would be $113.18 a month on a 72-month, $20,000 loan.

Don’t be discouraged if your credit score isn’t ideal

Credit scores are an important factor when it comes to getting an auto loan. However, if your credit score is on the low side, don’t be discouraged. Lots of people with less-than-ideal credit can still get financing for a car.

Here at Consumers, our loan officers work with members one-on-one to help them get auto loans every day. They take time to learn about each member’s situation and do everything they can to get member the best auto loan** possible.

If it’s time for you to get a new set of wheels, apply online or call us at 800-991-2221.

Consumers provides banking services for more than 100,000 members. If you have banking questions, call us at 800-991-2221. We make it easy to bank how you want, when you want.

*No taxes or fees included.

** All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions.

Federally insured by NCUA.

Credit counseling at Consumers

If you need help taking control of your finances, we can help.

Learn more

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