Yes, car dealerships heavily rely on FICO scores to determine loan eligibility and interest rates, specifically using specialized "FICO Auto Scores" designed to predict repayment likelihood. While standard FICO scores range from 300 to 850, auto-specific scores often range from 250 to 900, placing higher emphasis on previous vehicle loan repayment history.
FICO Auto Scores typically range from 250 to 900, unlike the standard FICO range of 300 to 850. Dealerships and lenders use these scores to better predict how likely you are to repay an auto loan.
Quick Answer. While it's possible to get an auto loan with nearly any credit score, most lenders are looking for buyers in the prime credit score range with a credit score of 661 or above for the best terms and rates. There's no minimum credit score required to get an auto loan.
Lenders can choose either FICO® or VantageScore® to evaluate car loan applicants. The most common choice is the industry-specific FICO Auto Score 8, which ranges from 250 to 900 (compared to 300 to 850 for the base FICO Score).
Preapproved offers for credit cards and personal loans typically don't impact your credit score, while mortgage and auto loan preapproval typically involve a hard inquiry, which affects your credit.
Pay your bills on time
Your payment history makes up 35% of your FICO® Score, so making sure that you pay your credit and bills on time is a big deal. Late payments on things like credit cards, mortgages, auto loans, or student loans can significantly impact your score.
Generally, a good credit score to buy a car falls within the range of 660 to 720 or higher. However, it's important to note that each lender has different criteria, and some may consider lower credit scores as well.
A $25,000 car loan payment varies significantly but generally falls from around $400 to over $700 monthly, depending on the loan term (3-7 years), interest rate (APR), and if you have a down payment, with shorter terms and higher rates meaning higher payments, while longer terms or good credit (lower rates) reduce monthly costs. For example, a 5-year loan might be about $494/month, but a 3-year loan could be over $770/month, even with similar rates.
FICO® credit scores are the auto industry standard for determining a potential buyer's creditworthiness. Using a variety of factors, the company will give you a three digit score ranging from 300 (lowest possible) to 850 (highest possible).
FICO auto scores and base FICO scores use the same information from individuals' credit reports but, as mentioned, the auto score model applies different weightings. For example, your history of auto loan payments will matter more in the calculation of your FICO auto score.
If your FICO scores differ from other credit scores you see, it's likely because the scores you're viewing were calculated using a different scoring version or model. Those versions may have different information from each other.
A higher credit score indicates a lower risk, which typically results in lower interest rates. Conversely, lower credit scores signal higher risk, leading lenders to impose higher interest rates to mitigate potential losses. This difference in interest rates can significantly impact the overall cost of a car loan.
Yes, you can likely get a $50,000 loan with a 700 credit score, as this falls into the "good" credit range (670-739) that unlocks better rates, but approval also hinges on your income, debt-to-income (DTI) ratio (ideally below 36%), and overall credit history, with lenders looking for stability and repayment ability, so prequalifying with multiple lenders helps compare terms.
For most people, increasing a credit score by 100 points in a month isn't going to happen. But if you pay your bills on time, eliminate your consumer debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
For years, dealerships have been using a tactic called a “four square”—a sheet of paper divided into four boxes where the salesperson will write down your trade value, the purchase price of the vehicle you're buying, your down payment, and your monthly payment.
"I'm Going to Pay Cash!"
If they know you have a specific budget, they also know they won't be able to move you up to a more expensive, profitable model. So if the salesperson asks about financing, just say you're undecided.