What is a good APR for a car loan?

A good APR depends on your credit score. Excellent credit (750+): 5-7%. Good credit (700-749): 7-9%. Fair credit (600-699): 9-14%. Poor credit (below 600): 14-25%+. New cars typically have lower rates than used.

Can I get a car loan with a 500 credit score?

Yes, but expect rates of 18-25% or higher. You'll likely need a larger down payment (20%+), proof of income, and may be limited to certain dealerships. Consider improving your score first or getting a co-signer for better terms.

What Credit Score Do You Need to Buy a Car? (2026 Guide)

Q: What credit score do you need to buy a car?

There's no minimum credit score to buy a car, but 661+ is considered good for auto loans. Scores of 700+ get the best rates. Below 600, you'll face higher rates (10-20%+) or need a larger down payment. Some lenders specialize in bad credit auto loans.

Credit Score Requirements by Lender

Minimum Scores

Lender Type	Minimum Score	Typical Rates
Banks (best rates)	660-700+	5-9%
Credit unions	600-640	6-10%
Captive lenders (dealer financing)	500-580	7-12%
Online lenders	580-620	8-15%
Buy here pay here	No minimum	15-30%+
Subprime lenders	450-500	14-25%

Lender Examples

Lender	Type	Typical Minimum
Capital One Auto	Bank	500+
Chase Auto	Bank	700+
Bank of America	Bank	660+
PenFed	Credit union	600+
Navy Federal	Credit union	None stated
Carvana	Online	500+
CarMax Auto Finance	Dealer	Varies
Westlake Financial	Subprime	450+

Interest Rates by Credit Score

New Car Rates (2024-2025 Average)

Credit Score Range	Rate (New Car)	Monthly Payment*
781-850 (Super Prime)	5.64%	$590
661-780 (Prime)	7.01%	$610
601-660 (Nonprime)	9.73%	$650
501-600 (Subprime)	12.28%	$695
300-500 (Deep Subprime)	14.78%	$740

*Based on $35,000 loan, 60 months

Used Car Rates (2024-2025 Average)

Credit Score Range	Rate (Used Car)	Monthly Payment*
781-850 (Super Prime)	7.66%	$500
661-780 (Prime)	9.73%	$520
601-660 (Nonprime)	14.12%	$570
501-600 (Subprime)	18.89%	$640
300-500 (Deep Subprime)	21.55%	$680

*Based on $25,000 loan, 60 months

Cost of Bad Credit

Interest Paid Over Loan Life

Credit Score	Rate	Total Interest (60 mo, $30K)
750+	6%	$4,799
700-749	8%	$6,497
650-699	11%	$9,116
600-649	15%	$12,686
550-599	18%	$15,411
Below 550	22%	$19,198

Monthly Payment Comparison

Credit Score	Rate	Payment ($30K, 60 mo)	Payment ($30K, 72 mo)
750+	6%	$580	$497
650-699	11%	$652	$573
Below 600	18%	$761	$684

Total Cost Difference

Compare	Payment Difference	5-Year Cost Difference
750+ vs 650	$72/month	$4,317
750+ vs Below 600	$181/month	$10,612

How Your Credit Is Evaluated

Factors Lenders Consider

Factor	Weight	What They Look At
Payment history	35%	On-time payments, missed payments
Credit utilization	30%	How much credit you’re using
Length of history	15%	Age of accounts
Credit mix	10%	Types of credit
New credit	10%	Recent applications

Auto-Specific Factors

Factor	Impact
Previous auto loan history	Shows you can handle car payments
Debt-to-income ratio	Can you afford payments?
Down payment	Larger = better rates
Employment stability	Steady income matters
Residence stability	Frequent moves can hurt

What Hurts Auto Loan Approval

Issue	Impact
Recent bankruptcy	Major negative (wait 2-4 years)
Repossession	Major negative (wait 4-7 years)
Multiple recent inquiries	Minor negative
High credit card balances	Moderate negative
Recent late payments	Moderate to major negative
No credit history	Considered high risk

Getting Approved with Bad Credit

Steps to Boost Approval Odds

Step	Action	Impact
1	Check your credit reports	Know where you stand
2	Dispute errors	May improve score
3	Pay down cards	Lower utilization
4	Get pre-approved	Know your rate
5	Save larger down payment	Reduces loan amount
6	Consider co-signer	Access better rates
7	Shop multiple lenders	Find best offer

Down Payment Strategy

Credit Score	Recommended Down Payment
750+	0-10%
700-749	10-15%
650-699	15-20%
600-649	20-25%
Below 600	25%+

Trade-In Value Helps

Trade-In Value	Effect
Any amount	Reduces loan needed
$5,000+	Significant improvement
Covers negative equity	Prevents being “underwater”

Lender Options by Credit Score

Score 750+ (Excellent)

Option	Why
Credit unions	Lowest rates
Banks	Competitive rates
Manufacturer financing	Special offers
Any lender	Full approval likely

Score 700-749 (Good)

Option	Why
Credit unions	Good rates
Banks	Competitive
Manufacturer financing	May qualify for promos
Online lenders	Compare offers

Score 650-699 (Fair)

Option	Why
Credit unions	More flexible
Capital One Auto	Works with fair credit
Dealership financing	May offer options
Online lenders	Specialize in this range

Score 550-649 (Poor)

Option	Why
Subprime lenders	Specialize in bad credit
Buy here pay here	No credit check
Credit unions (with relationship)	May work with you
Co-signer	Access better rates

Score Below 550 (Very Poor)

Option	Why
Buy here pay here	Often no credit check
Subprime specialists	Westlake, DriveTime
Co-signer required	Access any lender
Delay purchase	Improve credit first

Special Financing Programs

First-Time Buyer Programs

Program	Requirements	Benefits
First-time auto program	No auto loan history	Flexible approval
College grad programs	Recent graduate	Rate discounts, approval help
Military programs	Active/veteran	Special rates

Manufacturer Programs

Program	Credit Needed	Benefit
0% APR financing	700+ usually	No interest (huge savings)
Loyalty/conquest	680+	Rate discounts
Recent college grad	650+	Approval assistance

Credit Union Advantages

Advantage	Details
Lower rates	Often 1-2% below banks
More flexible	Consider whole picture
Lower fees	No prepayment penalties
Relationship matters	History with CU helps

How to Shop for Auto Loans

Best Approach

Step	Action	Why
1	Check credit score	Know what to expect
2	Get pre-approved (2-3 lenders)	Compare rates
3	Apply within 14-45 days	Counts as one inquiry
4	Negotiate at dealership	Use pre-approval as leverage
5	Compare all offers	Choose lowest total cost

Where to Get Pre-Approved

Option	Pros	Cons
Your bank	Relationship	May not be lowest rate
Credit unions	Often lowest rates	Must be member
Online lenders	Quick, many options	Less personal
Dealership	Convenient	May not be best rate

Rate Shopping Tips

Tip	Why
Apply within 14-45 days	All inquiries count as one
Compare APR, not payment	Dealers play with terms
Ask about fees	Some lenders charge more
Check prepayment penalty	Should be none
Get quotes in writing	Compare apples to apples

Improving Your Rate

Before Applying

Action	Potential Impact
Pay down credit cards	Significant (lower utilization)
Dispute credit errors	Could be substantial
Become authorized user	Helps thin files
Wait 6-12 months	If recent negatives
Save larger down payment	Better rates

At the Dealership

Tactic	How It Helps
Show pre-approval	Forces competitive offer
Negotiate price first	Then discuss financing
Be willing to walk	Leverage
Buy at month/quarter end	Dealers more flexible

After Purchase

Option	When
Refinance	6-12 months if score improves
Make extra payments	Reduce total interest
Autopay discount	Some lenders offer 0.25-0.5% off

Co-Signer Option

When to Use a Co-Signer

Situation	Co-Signer Benefit
Score under 600	Access better rates
No credit history	Get approved
High DTI	Combined income helps
Recent negative marks	Co-signer’s history helps

Co-Signer Requirements

Requirement	Details
Good credit	Usually 700+
Stable income	Lenders verify
Willing to pay	Legally responsible
Trust	Important relationship

Risks for Co-Signer

Risk	Reality
Liability	Fully responsible if you default
Credit impact	Loan shows on their report
Relationship strain	Money issues cause problems

Buy Here Pay Here

How It Works

Aspect	Details
Credit check	Usually none
Rates	18-30%+
Down payment	Often required
Payments	Weekly or biweekly common
Vehicle quality	Often older, higher mileage

When BHPH Makes Sense

Situation	Consider BHPH
No other options	Truly last resort
Need car immediately	Can’t wait to build credit
Building credit	Some report to bureaus

BHPH Warnings

Warning	Reality
High total cost	Often pay 2-3x car value
GPS tracking	Many install trackers
Quick repossession	Miss one payment = repo
Limited selection	What’s on lot

Frequently Asked Questions

Will getting pre-approved hurt my credit?

Pre-approval involves a hard inquiry, which may lower your score by 5-10 points temporarily. However, multiple auto loan inquiries within 14-45 days (depending on scoring model) count as a single inquiry, so shop around.

Should I finance through the dealer or bank?

Get pre-approved from your bank or credit union first, then let the dealer try to beat it. Dealers can sometimes access better rates (manufacturer subsidies), but they may also mark up rates for profit.

How long should my car loan be?

Shorter is better financially. 36-48 months for used cars, 48-60 months for new cars. Avoid 72-84 month loans—you’ll pay more interest and may owe more than the car is worth.

Can I get a car loan right after bankruptcy?

Yes, but expect high rates (15-25%). Wait 1-2 years after bankruptcy for better rates. Establish some positive credit history first, and save a larger down payment.

Credit Score Action Plan

30-Day Improvement Plan

Week	Action
1	Check credit reports, dispute errors
2	Pay down credit card balances
3	Get pre-approved, compare rates
4	Negotiate and purchase

6-Month Improvement Plan

Month	Action	Expected Gain
1-2	Pay cards below 30% utilization	20-40 points
3-4	Establish on-time payments	10-20 points
5-6	Let time pass	Score stabilizes
6	Apply for auto loan	Better rate

Bottom Line

Credit Score	What to Expect
750+	Best rates (5-7%), any lender
700-749	Good rates (7-9%), most lenders
650-699	Fair rates (9-14%), shop around
600-649	Higher rates (14-18%), need options
Below 600	High rates (18-25%+), limited options

Key takeaways:

You can get a car loan with any credit score—rates just vary dramatically
Every 50-point improvement can save thousands in interest
Shop multiple lenders within 14-45 days (counts as one inquiry)
Larger down payments improve rates and approval odds
Consider waiting 6-12 months to improve credit if possible
Credit unions often offer the best rates

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