When taking a big financial step, such as buying a car, knowing your credit score helps you to start the process with the right mind. After all, can you buy a car with your credit score? Let’s find out.

After all, the average cost of a new vehicle nowadays is upwards of $47,000, so paying cash is not always an option.

Any loan you apply for, however, the lender will perform a credit check on you. This could impact your credit score.

So if you have less-than-perfect credit, it is important that you evaluate the situation carefully before pulling the trigger.

On average, used-car loans or leases require a credit score of around 675. New-car loans or leases a good 738-point score.

However, well over half of financed cars were purchased by borrowers with a 661-point credit score or higher.

Still, according to a 2022 report which Experian released in August, borrowers with credit scores below 600 accounted for 16% of auto financing.

This serves to show that a lower credit score does not mean you will not be able to get a loan. Regardless, the lower your credit score, the higher the interest, which in turn means higher payments.

So, if you have poor credit, having a larger down payment and being able to offer proof of a good payment history may help you negotiate rates.

Knowing your credit score helps you anticipate what you can expect from lenders. It also helps you better plan the budgeting for your car. The better the credit score the lower the costs you will face.

There are a number of different scoring models which use basically the same information for calculating your creditworthiness. But they use different weighting methods which could result in different outcomes.

One of the most widely used scoring models is FICO. This scoring model has an industry-specific credit score for auto lenders called Fico Auto Score.

However, even though it is widely used, not all lenders rely on it. Experian is also another widely used scoring model.

To give you a basis, a score of 661 will get you a new-car loan with an APR of 4.03% or better. For used cars that will be a 5.53% APR or lower.

Also according to Experian data, people with a credit score of around 700 may be offered rates of about 5.53% for used cars. Meanwhile, those with a 500-point score may get a 16.85% APR.

If in doubt, it is worth asking your lender which scoring model they use before you pull the trigger and allow them to run a credit check on you.

Also, we advise using a car loan calculator to have a clear picture of what you can expect.

There are lenders for all credit score profiles. However, as we have mentioned before, the higher the score, the more advantageous your deal will be.

When lenders look at your auto loan application what they care the most about are your income and your credit score.

Based on those, they divide customers into Super Prime, Prime, Nonprime, Subprime, and Deep Subprime.

Super Prime customers have credit scores between 781 and 850. Prime customers are between 661 and 780.

Nonprime customers fall between 601 and 600. Subprime are 501 and 600. And Deep Subprime, 300 and 500.

As a rule, lenders are more willing to lend to Prime customers or better. If you are below that, chances are you will face higher rates.

Although payment conditions will be much less favorable if you are below the Prime range, you can still get an auto loan. Here are a few ways you can do it.

The fact is, if you have a bad credit score, lenders will view you as a risk. To offset that risk, the price of the loan must be worth it for them, and therefore they will charge a higher interest rate.

To help you put things into perspective, prime borrowers get an average interest rate of 4.03% when buying a new car as of Q2 2022.

Nonprime borrowers on the other hand can get rates from 6.57% to 12.84% depending on how bad their credit score is.

A 4.03% rate will make a $37,000 car cost $40.124 in the end, while a 12.84% rate will result in a final price of $47,505.

So if you have a bad credit score and want or need to buy a car before you have the chance to improve your score, you have to be willing to pay significantly more.

Yes, those folks exist. These dealers are often advertised as buy here, pay here dealerships. They offer in-house financing for used vehicles which is quite convenient. 

However, as we all know, there is no such thing as a free lunch, and these dealers often charge very high interest rates.

A cosigner can help you get better deals if you are in the Nonprime or Deep Subprime range.

A cosigner is a person who can apply for a loan with you. Ideally, you want someone with a good or excellent credit score, which will reduce your interest rate.

Your cosigner will share the responsibility for the loan with you. Having one when you apply reduces the risk in the eyes of the lender, which makes you more likely to qualify.

However, make sure you can meet the payments, otherwise your cosigner will be stuck with the bill.

Your credit score will always play a decisive role when it comes to auto loans. So know where you stand by getting a free credit score from online sources or your credit card company.

Also, make sure you get at least a few auto loan quotes from a few credit unions and banks before applying. That gives you bargain leverage as well as makes you cognisant of the best deals available.

Now that you know more about this subject, you can start your research for the perfect lender. Check our Auto Credit Express review to see if you can get this loan.