Most lenders will finance a car with a credit score of 620 or higher, but the score you need depends on the type of loan and the lender
There is no single "decent" credit score for buying a car because different lenders have different minimums. Traditional banks and credit unions often want to see 660 or above. Subprime lenders — who specialise in lending to people with lower scores — may approve you at 550 or even lower. The score matters because it determines whether you get approved at all, what interest rate you pay, and how much you put down upfront.
Your credit score is one piece of the decision, not the whole one. A lender also looks at your income, employment history, existing debts, and how much you are putting down. Someone with a 600 score and a stable job may get approved where someone with a 650 score and no income history will not.
Key Takeaways
- Credit scores of 620 to 660 are the rough floor for traditional auto loans, though some lenders go lower and some require higher.
- The interest rate you pay rises sharply as your score drops — a 50-point difference can cost you thousands over the life of the loan.
- Subprime lenders approve lower scores but charge much higher rates, so the monthly payment may be unaffordable even if you get approved.
- Putting down a larger down payment can offset a lower credit score and improve your chances of approval.
- Your score is not fixed — waiting a few months to pay down debt or dispute errors can meaningfully improve the rate you receive.
How credit score ranges affect approval and interest rates
Lenders group scores into bands, and each band comes with different approval odds and interest rates. A score of 740 or above typically qualifies you for the best rates — often 4 to 6 percent depending on the lender and loan term. A score between 670 and 739 usually gets you approved at a moderate rate, around 6 to 10 percent. A score between 620 and 669 is where approval becomes less certain and rates climb to 10 to 18 percent or higher.
Below 620, traditional lenders rarely approve you. Subprime lenders will, but rates can exceed 20 percent. The difference between a 620 score and a 680 score might be 8 percentage points on your interest rate. On a $25,000 car loan over five years, that difference adds up to roughly $5,000 to $7,000 in extra interest paid.
Interest rates also depend on the lender type. Banks tend to have stricter score requirements but lower rates once you may have access to. Credit unions often have more flexible score thresholds and lower rates than banks. Subprime lenders and buy-here-pay-here dealerships have the most lenient score requirements but the highest rates.
What happens if your score is below 620
A score below 620 does not mean you cannot buy a car, but your options narrow and your costs rise. Subprime auto lenders and some dealerships will work with you, but you should expect a high interest rate, a larger down payment requirement, and a shorter loan term. Some lenders may require a co-signer — someone with a better credit score who agrees to pay the loan if you do not.
Buy-here-pay-here dealerships are another option for very low scores. These dealers finance the car themselves rather than using a bank. They typically require a down payment of 30 to 50 percent and charge weekly or bi-weekly payments. The interest rates are extremely high — sometimes 18 to 29 percent — but approval is nearly automatic regardless of credit score.
Before you accept a subprime loan, consider whether waiting a few months to improve your score makes financial sense. Paying down existing debt, disputing errors on your credit report, or making on-time payments for three to six months can raise your score enough to may have access to for a better rate. The monthly savings may be worth the wait.
How down payment size affects your approval odds
A larger down payment reduces the lender's risk and can make approval easier even with a lower credit score. Putting down 20 percent or more signals that you are invested in the purchase and have cash reserves. Lenders view this as lower risk and may approve you at a better rate or with a lower score requirement.
If your score is below 620, a substantial down payment — 30 to 50 percent — can sometimes move you from outright rejection to approval. It also lowers the amount you need to borrow, which means a smaller monthly payment and less total interest paid. The trade-off is that you need to have that cash available now rather than spreading the cost over the loan term.
Why your score matters less than the monthly payment you can afford
A lender will approve you based on your credit score, income, and debt-to-income ratio. But approval does not mean the loan is affordable. Someone with a 580 score might get approved for a $30,000 car at 24 percent interest, resulting in a $700 monthly payment. If your income does not support that payment, you risk defaulting and losing the car.
Before you shop for a car, calculate what monthly payment you can actually afford. A common rule is that your car payment should not exceed 10 to 15 percent of your gross monthly income. If you earn $3,000 a month, a $300 to $450 payment is sustainable. If a lender offers you a $600 payment, approval is not the same as affordability.
Steps to improve your score before buying
If your score is below 660, you have options to improve it before applying for a car loan. The most effective steps take time but work reliably. Pay all bills on time for at least three months — payment history is 35 percent of your score. Pay down existing credit card balances, especially if they are near the limit — credit utilisation is 30 percent of your score. Dispute any errors on your credit report with the three major bureaus (Equifax, Experian, and TransUnion).
Do not open new credit accounts or apply for multiple loans in a short period. Each application triggers a hard inquiry, which temporarily lowers your score. Do not close old credit cards after paying them off — older accounts help your score. If you have no credit history at all, consider becoming an authorised user on someone else's credit card or taking out a small secured credit card to build history.
Even a 30 to 50-point improvement can move you into a better interest rate band. Waiting three to six months to buy a car might save you thousands in interest if your score improves during that time.
Frequently Asked Questions
Can I get approved for a car loan with a 600 credit score?
Yes, but only through subprime lenders or buy-here-pay-here dealerships. Traditional banks and credit unions rarely approve scores below 620. Expect a high interest rate, a large down payment requirement, and possibly a co-signer. Compare offers from multiple lenders before accepting.
Does the type of car I buy affect my approval odds?
Lenders care more about the loan amount and your ability to repay than the specific car. A used car with lower value may require a larger down payment percentage, but approval depends on your score and income, not whether the car is new or used.
What is the difference between a hard inquiry and a soft inquiry when I shop for a car?
A soft inquiry (like checking your own score) does not affect your credit. A hard inquiry (when a lender checks your score to decide whether to approve you) lowers your score slightly. Multiple hard inquiries in a short time hurt your score more, so try to complete your car shopping within 14 to 45 days so inquiries count as one.
Should I use a co-signer if my score is low?
A co-signer with a better score can help you get approved and may lower your interest rate. But the co-signer is legally responsible for the loan if you do not pay. Only ask someone you trust, and understand that missed payments will damage their credit too.
How long does it take for a late payment to stop hurting my credit score?
A late payment stays on your credit report for seven years, but its impact weakens over time. After two years, it matters much less. After five years, most lenders pay little attention to it. Making on-time payments now is the fastest way to offset the damage.