Thinking about buying a new car soon? If so, you’re probably asking yourself the question, “What should my credit score be to buy a car?”, right now.
And for good reason. There’s nothing worse than working your way through the process of trying to buy a new car—only to find out that your credit score isn’t high enough to qualify for a great loan for one.
The good news is that there’s a decent chance that you can get approved for a car loan regardless of what your credit score is. But the bad news is that you’re going to have to pay a pretty penny when it comes to interest if you don’t have an excellent credit score.
Let’s take a closer look at how your credit score is going to impact your ability to buy a new car for the right price.
How a High Credit Score Can Help You
Is your credit score up over 760 right now?
This is a great sign for you. You really don’t even have to worry about asking the question, “What should my credit score be to buy a car?”, if you have a credit score that high.
At the moment, most lenders are giving those with credit scores over 760 new car loan rates that sit somewhere between 2 and 3%. These kinds of low rates will save you so much money over the life of your auto loan.
One thing that you should remember, though, is that the length of your loan can also impact your loan rate. Even if your credit score is up over 760, your interest rate is likely going to be up over 3% if you choose to take out a 48-month, 60-month, or 72-month loan.
Whenever possible, it’s always smart to take out a 36-month loan. When you couple it with an excellent credit score, you’ll pay next to nothing in interest while you’re paying back your loan.
How a Low Credit Score Can Hurt You
Those with credit scores hovering up over 760 don’t have to be concerned at all about getting the best interest rates on auto loans. But the same can’t be said for those who sit on the other end of the spectrum.
The lower that your credit score goes, the higher the interest rate on a car will be. And while those with credit scores in the high 600s and 700s can still get access to affordable rates, anyone with a credit score below 680 or so could be in trouble.
Lenders are often a little bit gun-shy about giving out loans to those with credit scores that fall under 680. As a result, they’ll cover themselves by offering loans to people as long as they’re willing to take on astronomical interest rates.
It’s not uncommon for people to accept loans that all well over 10 and, in some cases, even 18%! These types of interest loans call for borrowers to pay lenders handsomely for providing them with loans.
If your credit score is on the lower side and you feel like it’s going to cost too much to finance a car because of it, you should think about trying to bring your score up before buying a new car.
Ways to Improve Your Credit Score Before Buying a Car
Would you like to make every effort to bring your credit score up over 760 before you purchase a new car? It’s not as difficult to do as you might think.
For starters, you should sit down and see what’s causing your credit score to be so low. Is it low because you:
- Have a lot of credit card debt that’s showing up on your credit report?
- Have missed credit card payments on your credit report?
- Don’t have much of a credit history thanks to your age?
Once you know why your credit score is as low as it is, you can start doing something about it. You can elevate your credit score by:
- Paying down your debt as quickly as you can
- Making payments on your credit cards on time month after month
- Applying for credit and adding available credit to your credit report to bring down your credit utilization rate
You can also increase your credit score by pinpointing any errors that might exist on your credit report and having them removed. Studies have shown that about 20% of people have errors in their credit reports and could benefit from removing them in a big way.
Tips for Finding the Right Auto Loan for Your New Car
In addition to improving your credit score to get a better interest rate on a car loan, you should also make sure you’re looking around for the right loans through different lenders. Some lenders are more forgiving than others as far as giving out loans to those with less-than-perfect credit.
When you’re considering taking out a car loan, attempt to get preapproved for a loan through several different lenders. Search for lenders with lots of experience working with those who don’t have incredible credit scores.
You might be surprised to see how two different lenders will offer you two completely different interest rates for a car loan. By simply comparing the rates offered by lenders, you can find one that will help you buy a new car for the right price.
Why It’s Important to Ask “What Should My Credit Score Be to Buy a Car?”
There are a lot of people who don’t take the time to ask, “What should my credit score be to buy a car?” Many of them end up accepting a super high-interest rate on a car loan after falling in love with a car that they want.
Check your credit score before heading down to a car dealership, and make sure it’s high enough to qualify for a great interest rate. It could save you a lot of time and money in the end.
Read through our blog to find more tips for buying a new car and getting a great deal on it.