What Credit Score Do You Need to Buy a Car?

More fundamental credit Q&A: “What credit score do you need to buy a car?”

When it comes to buying or leasing a car, good credit (what is a good credit score) is often a necessity, as most of us can’t just mosey down to the car dealership and buy outright.

But there isn’t a specific credit score that you need in order to get financing, as that can vary from dealer/financier; not to mention other factors that come into play.

For example, you may have a relatively light credit history, but nothing derogatory dragging you down, so your credit score may be quite high.

However, at the same time, if you’ve never supported a large amount of debt, such as an auto loan, car lease, or a mortgage, the dealer may be hesitant to offer you a loan.

Conversely, a consumer with less than stellar credit may get approved with little difficulty for the same auto loan you wanted just because they have past auto loan history on their credit report.

The way dealers see it, even though that three digit number isn’t quite as high as they’d like, the consumer displayed the ability to repay an auto loan in the past, so a subsequent loan seems reasonable.

Keep in mind that the lower your credit score, the higher the interest rate will be on the auto loan or lease.

And many car dealers only pull credit from a single credit bureau, instead of using a tri-merge, which uses the median score from all three bureaus.

For this reason, it’s important to ensure that your credit is ship shape with all three credit bureaus, as you never know which one may be called upon for your loan approval.

If your credit isn’t sufficient to get that new car, the dealer will usually work with you to ensure that a sale/lease is completed.

This could involve bringing in a co-signer, such as a parent or spouse with more established credit, or charging a higher interest rate to offset risk.

It’s probably wise to consider a co-signer if the lender/dealer wants to charge you a premium based on your credit alone, or hold off until your credit score improves.

Remember, you can obtain auto loan financing via a bank or a dealer, so shop around.

Related Topics:

1. Better Have a Credit Card If You Plan to Rent a Car
2. What Exactly is a Good Credit Score?
3. Insurance Rates, Claims, and your Credit Score
4. How a Fico Score is Determined
5. It’s Okay To Cancel Your Credit Card