Need a new vehicle but don't have a great credit score or cash? Keep reading to see how an auto loan can be put into your reach.
Credit Score 600? Here’s How To Get An Auto Loan
You have a 600 credit score, but you shouldn't be penalized because of this one number. Whatever the reason your score has fallen to 600, you still need a reliable and safe vehicle to get from point A to point B. Unless you have the cash, that means you need an auto loan.
It's essential to be knowledgeable about how your auto loan process will be different than someone with a higher score. You might not have the same options, but you can still get an auto loan with a 600 credit score.
Lender Considerations When Applying for an Auto Loan
When you get an auto loan, there are two significant considerations. One is your income, which lets lenders know how much you can afford to pay monthly, and the next is your credit score, which indicates the likelihood that you'll fulfill your loan obligations.
Having a 600 credit score alerts lenders that you struggle to repay money that you borrow so they are more cautious when loaning you money.
One of the ways this will impact your auto loan is the interest rate you will qualify for. Interest rates can range from 3.5% for those with excellent credit to over 15% for those with lower credit scores.
The Interest Rate Difference
Your interest rate is the portion of the loan charged to you that’s also known as the annual percentage rate. Interest rates vary widely, and your credit score is the primary indicator of the type of rate you’ll get.
Here's an example showcasing how your loan is affected by a low-interest rate and a high-interest rate.
Low-Interest Rate Loan
Car Price: $25,000
Interest Rate: 4.69%
Loan Term: 60 months
Monthly Payment: $468
Total Car Cost: $28,094
High-Interest Rate Loan
Car Price: $25,000
Interest Rate: 16.78%
Loan Term: 60 months
Monthly Payment: $618
Total Car Cost: $37,102
When you compare these two loans, the only difference in the terms is the interest rate. The low-interest loan rate is 4.69%, and the high-interest loan rate is 16.78%.
With the higher interest rate, you will pay $150 more per month and $9,008 more over the length of your 60-month loan. While you can't do much about these more expensive rates until you improve your credit, it's crucial that you understand how your interest rate is impacting your auto loan financing.
Documentation Requirements
Whether your credit score is 600 or 800, you will need to provide your lender with some documentation proving your ability to repay your loan.
This includes:
- Proof of employment via a pay stub - you generally need to make at least $1,500 per month to qualify for an auto loan
- Tax returns if you are self-employed
- Driver’s license
- Proof of residency in the form of a utility bill
Make A Down Payment
While there are some zero down payment loan options for those with excellent credit, you will likely need to put down some money when you purchase your car.
Your lender will be cautious of your ability to repay based on your credit score, so making a downpayment provides them with some money up front in case you don't follow through with making payments. Your down payment requirement can vary greatly.
Get A Co-Signer
If you have a friend, spouse, or loved one who agrees to co-sign your loan, it can increase your chances of qualifying for a loan and improve your terms. Your co-signer will be legally and financially responsible for your loan, so be sure to work out all of the details with them before they agree.
Credit Union Auto Loans For 600 Credit Score
A credit union is a not-for-profit financial institution that passes its savings on to you, its members. They are also smaller than most traditional banks, so they can evaluate your specific situation on an individual basis.
Credit unions are also known to have lower rates than banks, and now that you know the importance of getting the lowest interest rate possible, it's worth it to apply for an auto loan with a credit union.
At Listerhill Credit Union, we know how important it is to find a loan that fits your needs and your budget without being penalized for having a lower score. If you’re looking for an auto loan with a 600 credit score, let us help you. It's free to apply, and we have some $0 down payment offers, along with flexible payback options.
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![Getting an Auto Loan with a 600 Credit Score (1) Getting an Auto Loan with a 600 Credit Score (1)](data:image/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==)
FAQs
In general, you'll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender. As interest rates increase due to inflation, securing a subprime auto loan may be more difficult — but not impossible.
Can I get approved for a car with a 600 credit score? ›
Unless you have the cash, that means you need an auto loan. It's essential to be knowledgeable about how your auto loan process will be different than someone with a higher score. You might not have the same options, but you can still get an auto loan with a 600 credit score.
How big of a loan can I get with a 600 credit score? ›
With FICO, fair or good credit scores fall within the ranges of 580 to 739, and with VantageScore, fair or good ranges between 601 to 780. Many personal loan lenders offer amounts starting around $3,000 to $5,000, but with Upgrade, you can apply for as little as $1,000 (and as much as $50,000).
What interest rate will I get on a car loan with a 600 credit score? ›
Average Car Loan Interest Rates by Credit Score
Credit Score Range | New Car Loan Rates | Used Car Loan Rates |
---|
661 to 780 | 7.01% | 9.73% |
601 to 660 | 9.60% | 14.12% |
501 to 600 | 12.28% | 18.89% |
300 to 500 | 14.78% | 21.55% |
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Can I get a 30k car with a 650 credit score? ›
Summary. Even though a 650 credit score isn't that great, it is enough for you to secure a car loan, albeit with a relatively high interest rate. Remember that you can improve your credit history and refinance with another bank at a lower interest rate down the line.
Can I get a $40,000 car with a 600 credit score? ›
In general, you'll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender. As interest rates increase due to inflation, securing a subprime auto loan may be more difficult — but not impossible.
What FICO score do car dealers use? ›
Your FICO score is a representation of your credit worthiness. FICO offers specific products and solutions for car dealers and auto loans. Their product is called Auto Score 8. As you can see here from FICO's promotional materials, Auto Score 8 is meant to help dealers, “Improve accuracy and speed of decision making.
Why can't I get a loan with a 600 credit score? ›
Your score falls within the range of scores, from 580 to 669, considered Fair. A 600 FICO® Score is below the average credit score. Some lenders see consumers with scores in the Fair range as having unfavorable credit, and may decline their credit applications.
What credit score do I need for a $50,000 loan? ›
Most lenders prefer borrowers with a credit score in the good to excellent range (670 or higher), indicating a history of responsible financial management.
What credit score do you need to get a $30,000 loan? ›
You will need a credit score of 580 or higher to get a $30,000 personal loan in most cases, along with enough income to afford the monthly bill payments. Other common loan requirements include being at least 18 years old, being a U.S. citizen or a permanent resident, and having a valid bank account.
The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
Who has the lowest car loan rates right now? ›
Compare Car Loan Rates
Top Auto Loan Lender | Lowest APR | Term Length |
---|
PenFed Credit Union | 5.24% | 36 to 84 months |
Auto Approve | 5.24%** | 12 to 84 months |
Consumers Credit Union | 6.54% | Up to 84 months |
Auto Credit Express | Varies | Varies |
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What is a bad APR for a car? ›
People with excellent credit qualified for rates around 5.64 percent, while people with bad credit had an average new car rate of 14.78 percent. Rates for used cars were higher — 11.93 percent across credit scores. And the average rate for bad credit was a sky-high 21.55 percent.
How fast will a car loan raise my credit score? ›
How fast will a car loan raise my credit score? There's no set time frame for how long it takes a car loan to improve your credit score. After buying a car, you can expect to see your score improve after making monthly payments on time and paying down your loan balance.
What credit score is needed to buy a car without a cosigner? ›
There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
What credit score do I need for a 30 000 car loan? ›
In general, lenders look for borrowers in the prime range or better, so you will need a score of 661 or higher to qualify for most conventional car loans.
What is the minimum credit score for car finance? ›
There is no minimum credit score required to be approved for car finance for a number of reasons: – Different finance providers will use different third-party credit reference agencies to retrieve your credit score. A person's credit score will be different across providers as their scoring systems are unique.
What credit card can I get with a 600 credit score? ›
Compare the best cards you can get with a 600 credit score
Card name | Reward highlights | Fees |
---|
Mission Lane Cash Back Visa® Credit Card | Unlimited 1 percent or 1.5 percent for all qualifying purchases | $0 annual fee |
Capital One Platinum Credit Card | N/A | $0 annual fee |
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What credit score is needed to buy a car? ›
The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
What credit score is needed for a car? ›
Key Takeaways. Your credit score is a major factor in whether you'll be approved for a car loan. Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.