A decent credit score to buy a car is generally considered to be 661 or above, which falls into the prime credit tier. This score typically qualifies you for competitive interest rates from most lenders. However, you can secure financing with a lower score; the key difference is the cost of the loan. The higher your score, the lower your Annual Percentage Rate (APR), which translates to significant savings over the life of the loan.
Your credit score is a numerical representation of your creditworthiness, primarily based on your credit history from the three major bureaus: Experian, TransUnion, and Equifax. Lenders use it to assess the risk of lending you money.
Here’s a breakdown of common credit score tiers and what you can expect when financing a car:
| Credit Score Tier (FICO® Score 8) | Rating | Typical Auto Loan APR (New Car, Q1 2024)* | Loan Accessibility |
|---|
| 781 - 850 | Super Prime | 5.61% - 7.43% | Excellent rates, easy approval |
| 661 - 780 | Prime | 7.43% - 9.75% | Good rates, high approval likelihood |
| 601 - 660 | Non-Prime | 11.70% - 15.24% | Higher rates, may require larger down payment |
| 501 - 600 | Subprime | 15.24% - 18.99% | Difficult, requires special financing |
| 300 - 500 | Deep Subprime | 19%+ | Very difficult, not offered by all lenders |
*APR ranges are estimates based on industry reports from sources like Experian Auto and Edmunds; your actual rate will vary.
While a 661 score is a good target, aiming for a score in the prime or super-prime range (661+) will save you the most money. If your score is below 661, you can still get a car loan, but you should prepare for a higher interest rate. To improve your position, consider saving for a larger down payment, which reduces the amount you need to borrow and shows the lender you are a lower risk. It's also wise to get pre-approved for a loan from your bank or credit union before visiting the dealership, as this gives you a bargaining chip and helps you understand your true budget.
