Good Credit Score To Buy A Car – What’s The Optimal Credit Rating For A Car Loan?

By Rory Ackerman •  Updated: 08/12/22 •  7 min read
Filed under: Credit Score

Buying a new car these days is a much greater cost than it used to be just a decade ago. Back in 2012, the average price for a new car was around $30,000, while in 2022 the price went up to $47,000. Most people just can’t afford to buy a car with cash which means you’ll need a loan – which then might have you asking: what is a good credit score to buy a car with?

Luckily, you can rely on this guide to lead you through the process as we’ll go over the best credit score for a car loan, the difference in interest rates based on different FICO ratings, and the interest amount you’ll be looking at with new and used car loans!

Average Credit Score For Getting An Auto Loan Approved

As you set out to find a suitable loan for your new car, you’ll notice that most car lenders rely on FICO credit scores. In general, your FICO credit scores could range from FICO 300 to FICO 850, but only a certain range will qualify for an auto loan.

Getting An Auto Loan Approved

According to Investopedia, the average credit score for getting an auto loan approved in the US is 661 or higher. That doesn’t mean you can’t get a car loan approved even if you have a lower credit score – it’s just the average rating level of the consumers that get a bit more convenient interest rates than those with poor credit.

That’s right – depending on your credit score, the interest rates on auto loans can drastically vary and you shouldn’t overlook that. 

The Meaning Of Prime Credit Score For Auto Loans

Now that we mentioned the average credit scores for an auto loan, let’s go ahead and explain the credit categories that auto lenders consider for the loan. While there’s no specified minimum credit score needed for an auto loan, borrowers with poor credit will get the worst possible terms with extremely high-interest rates.

On the other hand, having a prime credit range or super-prime credit range gives you the most convenient repayment terms.

The prime credit range is between FICO 661 and FICO 780, while the super-prime range starts at FICO 781. So, let’s say that your rating fits into the prime credit range. In this case, your APR would be around 4.6% for a new car loan on average or around 6% for a used car loan.

However, lenders whose ratings fit into the nonprime range, which is below the prime range up to FICO 600, will have around 7.6% APR on new car loans, or around 11.2% APR for used car loans. So, you would pay double the APR with a nonprime range credit score than you would with a prime range rating, and that’s an important factor to have in mind.

Can You Get An Auto Loan With Bad Credit?

If you think it’s bad to pay so much interest per year with a nonprime rate, subprime borrowers will pay even more, so it doesn’t make much sense to go with a car loan with bad credit.

Truth being said, you can save quite a bit on interest paid annually if you boost your credit score before applying for the loan. However, if you are eager to get a bad credit car loan without wasting a minute more, the good news is you can do it.

Auto Loan With Bad Credit

Having a bad credit score doesn’t close the doors towards getting approved for a car loan like with many other types of loans. However, you’ll have to be willing to pay much more in interest as a deep subprime borrower, than you would as a prime borrower.

One of the things you can rely on to reduce the overall cost of the loan is making a solid down payment. If you don’t have the cash, maybe you can trade in your old vehicle to get at least some reduction in the total cost of the loan.

What Do Auto Lenders Consider Before Granting The Loan?

Although credit rating is a major factor, there are also other factors that car lenders consider before approving the loan:

So, car lenders will pull your reports from the three major credit bureaus, and consider your history of monthly payments. Your financial health doesn’t only reflect through the credit score itself but through the history of dealing with similar types of credit.

If you have a good payment history, your monthly payment rate will be lower. That’s also where the debt to income ratio comes in – it specifies how much debt you have each month compared with how much you earn.

Missed credit payments might make the auto lender step away from the offer even more than bad credit does. So, your repayment capacity and financial habits will be observed, along with the credit mix and your rating to determine the interest rate on your auto loan.

Interest Rate Difference Based On Credit Score Levels

While all the listed factors contribute to the lender’s decision on whether to give you a loan or not, your FICO credit score plays a crucial role. After looking at the reports from the three major credit bureaus and your credit scores, lenders will offer you an APR on your loan.

According to Experian’s research in 2020, here’s what you can expect of your APR level on average, based on your credit rating level:

Credit Rating Level Average Rate For A New Car Average Rate For Used Car
Super Prime – Above FICO 720 3.6% 4.3%
Prime – FICO 660 To 720 4.6% 6%
Nonprime – FICO 620 To 659 7.6% 11.2%
Subprime – FICO 590 To 619 11.9% 17.7%
Deep Subprime – Below FICO 579 14.4% 20.4%


Based on this research, you can tell how the difference in credit scores might affect your loan repayment terms. Especially with a used car loan, your credit scores make a big difference considering the interest rate.

If your credit score fits in the nonprime level or below it, you should browse the car loan rates of different bad credit lenders. 

It can be much easier to boost your score for a few months and get a car loan with more convenient interest rates than to pay high interest with poor credit. So, you can lower your credit utilization rate and extend credit limits to secure a good score for an auto loan.

This way, car financing gets much easier with a higher credit score, since most bad credit lenders will offer high APR for poor credit borrowers.

Final Thoughts

Hopefully, you can use this guide to get a better understanding of how your credit score affects the car loan qualification and the paid interest amount. With good credit scores, you’ll surely pay less interest and get a loan with terms of 48 or 60 months.

On the other hand, deep subprime borrowers might end up paying thousands of dollars more for the loan when compared to consumers with decent credit scores. Make sure to shop around for the most convenient car loan offer, and keep your credit score in the prime range if possible for convenient repayment terms.

Frequently Asked Questions (FAQ):

What’s an average credit score for getting a car loan approved in the US?

On average, the credit score needed for an auto loan in the US is in the prime credit range above FICO 661. Still, there are plenty of options for those with bad credit scores to get approved for a loan as well.

Is FICO 700 a good credit score to buy a car?

Yes, FICO 700 is a great score overall, and if you can boost it to enter the super-prime range, you might secure the lowest possible interest on auto loans. According to Experian’s research in 2020, a consumer with this minimum credit score level can count on a 3.6% APR for an auto loan.

Which credit score range isn’t good for a car loan?

If your minimum credit score is in the subprime or deep subprime credit range, your interest rates might render the loan just too expensive. With a 600 or lower FICO auto score, you will probably get a high APR rate of around 12% or more, so it makes more sense to work on your credit score and then apply for a loan than to apply with a poor credit rating.

Rory AckermanRory Ackerman

Rory Ackerman

Hi, I'm Rory! I've worked in the banking industry for quite some time and wanted to help provide my expertise with all things credit related. In my spare time I like to play video games and collect sports cards.

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