Auto financing typically requires a minimum credit score that applicants must have in order to qualify. This, along with the credit history and other requirements that must be met according to the guidelines of each lender, will determine the possibility of credit approval. Therefore, there is no certain answer to the question of what credit score is needed to finance a car purchase.
While most lenders tend to work with clients with good credit, there are lenders who have dedicated themselves to helping buyers with bad credit. These lenders, called subprime lenders, have emerged to fill the gap of customers with unique credit situations.
What should my FICO score be when I have bad credit?
According to the report issued by the US credit agency, Experian, during 2019 the average credit of borrowers who financed their new cars was around 716 points. While for used cars the credit score was around 661 points.
Despite the aforementioned figures, there is no accurate answer about the score needed to get a loan. The obtaining an auto loan having bad credit will depend on factors such as:
- Your credit history
- Requirements, which vary between lenders
- Your situation
Although there are possibilities that you obtain financing having bad credit, it is important that you remember that these loans come with high interest rates . To reduce them, it is advisable that you prepare before making the purchase of your new car.
Plan your next purchase
If you have bad credit, no credit or have a unique situation with your credit, it is recommended that you prepare for the purchase of your new vehicle:
- Pay the costs incurred by repossession – If your car has been repossessed, you are still responsible for paying the dealer the costs caused by the repossession process and, if any, pay the difference between the sale price of the car after the However, and the money you still owed.
- Request a copy of your credit – Every 12 months you can get it for free. This will allow you to review the conditions of your credit and solve any error or discrepancy between your accounts.
- Reconcile with your debts – If you have debts on credit cards or any other type of credit, it is recommended that you make your payments up to date and lower your balances. Lowering them will help you increase your credit points, allowing you to obtain a lower interest rate when requesting financing for your new car.
- Start saving for the down payment – Sub- prime lenders generally ask for 10 percent or $ 1,000 , whichever is less. If your budget allows it, it would be a good idea to save a little more, so that you can offer a larger advance than requested. Thus, your credit will cost you less at the end of the contract.
Auto Credit Express is here to help you!
Most auto dealerships do not grant credit to applicants with unique credit situations. However, Auto Credit can help you.
We have an extensive network nationwide with auto dealers who work with clients who have no credit, have bad credit or have a special situation with their credit. We are not lenders, although we do put you in touch with the auto dealership in your area.