Minimum Credit Score Needed to Get a Car Loan

Reader Question: "Is there a minimum credit score needed to qualify for a car loan, or does it vary from one car dealer to the next?"

No, there is no minimum score for these types of loans, and the standards vary quite a bit. So I am unable to give you a number or even a range for qualification. There's just no way to say what score you'll need to get a car loan, not across the board anyway.

In terms of financing, the auto industry is much more diverse than other industries. The mortgage lending industry, for example, is much more standardized. So it would be easier to give you a credit score range for mortgage qualification. In fact, I've done that in this post. But car loans are a different story entirely. There are just too many variables for me to proclaim a minimum score needed.

So let me just say this. The only way to find out if you can qualify for a car loan with your current credit score is to apply for such a loan. Auto dealers will generally accept a wider range of scores than mortgage lenders will. For example, you probably wouldn't qualify for a mortgage with a FICO score below 650 (not in the current economy anyway), but you could probably get a car loan at that level. The reasons for this are fairly obvious. It's a smaller loan, and thus a smaller risk for the creditor. Thus, they are more flexible with their criteria.

If I were you, I would check out some of the big auto-lending websites, such as DriveTime.com. According to their website, they specialize in car loans for people with bad credit. A quick word of caution though -- be sure to find out exactly how much the loan is going to cost you each month. Lenders charge a higher interest rate to borrowers with bad credit. So the lower your score, the higher the rate. This means a bigger monthly payment. So read all of the fine print and make sure you understand the full cost of the loan.