Not only might you need to have a decent-to-good credit score to secure a no-money-down loan, but having a good credit score (at least 680 points) is also the best way to prevent a lender from increasing the interest rate they would've given you on a conventional loan.
You can buy a car with no down payment, but you are more likely to pay much higher interest rates. Another option is to buy a cheaper used vehicle or trade in your existing car, if you have a vehicle that's in good condition, which can help lower your rate, too.
There is no minimum credit score required to buy a car, but most lenders have minimum requirements for financing. Most borrowers need a FICO score of at least 600 to get a competitive rate on an auto loan.
0% APR auto loans are reserved for "well-qualified" buyers.
In most cases, "well-qualified" refers to borrowers with a credit score of 740 or higher. If a borrower isn't in this credit bracket and applies for the 0% APR offer, they could be taking a hit on their credit score that could have been avoided.
A 750 score is considered excellent. You will get among the very best rates on loans and credit cards. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website.
Your credit score is a major factor in whether you'll be approved for a car loan. Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.
A down payment between 10 to 20 percent of the vehicle price is the general recommendation. But if you can afford a larger down payment, you can save even more money on interest payments over the life of the loan.
What is the highest credit score possible? To start off: No, it's not possible to have a 900 credit score in the United States. In some countries that use other models, like Canada, people could have a score of 900. The current scoring models in the U.S. have a maximum of 850.
Automakers such as Ford, Kia, and Hyundai are known for working with borrowers who have lower credit scores. In addition, CarsDirect has a network of dealers that specialize in bad credit car loans whether you're considering a new or used car.
To get the best rate, it's recommended to put at least 20% down for a new car and 10% down for a used car. There is no set formula, however: The average down payment on a new car in early 2024 was just over 14%.
What credit score is needed to buy a car without a cosigner? People with prime credit scores of 661 or higher likely don't need an auto loan cosigner.
Auto lenders use a special reporting system called FICO® Auto Score when determining the creditworthiness of a potential customer. The three credit reporting bureaus that contribute information to your FICO® Auto Score are TransUnion®, Equifax® and Experian™.
Payment Amount
For example, for a car price of $20,000, a down payment of $4,000, a loan amount of $16,000, a loan term of 48 months, an annual interest rate of 5%, and a start-of-period payment method, your payment amount would be $366.94. You would be paying this amount each month for your auto loan.
Putting money down on a car, even less than 20%, will usually work in your favor. A down payment removes some of the lender's risk and transfers it to you. After all, you'll lose your down payment if your car gets repossessed.
NerdWallet recommends spending no more than 10% of your take-home pay on your monthly auto loan payment. So if your after-tax pay each month is $3,000, you could afford a $300 car payment. Check if you can really afford the payment by depositing that amount into a savings account for a few months.
CarMax is a strong option for buyers looking for flexible financing with no minimum credit score requirement and a straightforward online process. Its starting APR of 5.75% and loan terms of 24–72 months are competitive.
However, for auto loans, lenders usually prefer a debt-to-income ratio below 36%. The minimum income necessary to qualify for an auto loan may vary, but most lenders prefer an applicant to have at least $1,500 to $2,000 in monthly income before taxes.
A perfect FICO credit score is 850, but experts tell CNBC Select you don't need to hit that target to qualify for the best credit cards, loans or interest rates.
Your score falls in the range of scores, from 800 to 850, that is considered Exceptional. Your FICO® Score and is well above the average credit score. Consumers with scores in this range may expect easy approvals when applying for new credit. 21% of all consumers have FICO® Scores in the Exceptional range.
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024.
However, transitioning from fair to good credit (700-749) might take a few additional years of responsible credit behavior. Reaching an excellent credit score (750 and above) is generally a long-term goal and may require at least five to ten years of consistently responsible credit habits.