Credit Score for Auto Loan
Bad credit = $8,900 extra on a $35K car. Here are the exact rates by credit tier and how to get the best deal.
Your credit score directly determines your auto loan rate. The difference between good and bad credit can cost thousands.
Auto Loan Rates by Credit Score (2025)
| Credit Tier | Score Range | New Car APR | Used Car APR |
|---|---|---|---|
| Super Prime | 781+ | ~5.2% | ~6.8% |
| Prime | 661-780 | ~6.7% | ~9.0% |
| Nonprime | 601-660 | ~9.7% | ~13.5% |
| Subprime | 501-600 | ~13.2% | ~18.8% |
| Deep Subprime | 300-500 | ~15-21%+ | ~21%+ |
Rates are approximate based on 2025 market data. Actual rates vary by lender, loan term, and vehicle.
What This Means in Dollars
On a $35,000 car loan over 60 months:
Auto Lenders Use Special FICO Scores
Auto lenders don't use the same FICO score as credit cards. They use specialized "FICO Auto Scores" that:
- Weight your auto loan payment history more heavily
- Use a different scale (250-900 instead of 300-850)
- May be higher or lower than your standard FICO 8
Common auto score versions: FICO Auto Score 2, 8, and 9.
Minimum Scores for Auto Loans
There's no official minimum — someone will always lend if you can pay. But here's what to expect:
- Prime lenders (banks, credit unions): Usually want 660+
- Captive lenders (Ford Credit, Toyota Financial): May go lower, 580-620
- Subprime lenders: Accept 500 and below, but at high rates
- Buy Here Pay Here: No minimum, but predatory rates (15-25%+)
⚠️ Avoid Buy Here Pay Here
"Buy Here Pay Here" dealerships charge average APRs of 15-25%+, often don't report positive payments to bureaus (only negative), and may install kill switches for repossession. They profit from repeat repos. If possible, build credit first with a secured card, then finance through a credit union.
How to Get the Best Rate
1. Get Pre-Approved Before Shopping
Visit your bank or credit union and get a pre-approval letter. This:
- Shows you exactly what rate you qualify for
- Gives you negotiating leverage at the dealer
- Protects you from dealer "rate markup"
2. Understand the Dealer Spread
Dealers often markup rates. If a bank offers them 5%, they might offer you 7% and keep the 2% difference. Having a pre-approval forces them to compete.
3. Shop Within 14-45 Days
FICO treats multiple auto loan inquiries within a 14-45 day window as a single inquiry. Shop aggressively during this window.
4. Credit Unions Often Beat Banks
Credit unions typically offer rates 0.5-1.5% lower than banks. If you're not a member, many are easy to join (live in area, work for certain employer, etc.).
Preparing for an Auto Loan
🚗 Auto Loan Prep Checklist
- ☐ Check your actual FICO score (not VantageScore)
- ☐ Pay down credit cards to lower utilization
- ☐ Don't open new accounts in the months before
- ☐ Get pre-approved at credit union first
- ☐ Compare at least 3 lenders
- ☐ Know your target payment and don't exceed it
If Your Score Is Low
Options if you're in the subprime range (below 620):
- Delay purchase — 3-6 months of credit building can save thousands
- Larger down payment — More money down = better rate
- Co-signer — Someone with good credit co-signs (they're equally liable)
- Shorter loan term — Lenders offer better rates on shorter terms
- New vs used — New car loans often have lower rates than used
Refinancing Later
If you get a high-rate loan now, you can refinance after improving your credit:
- Most lenders require 6-12 months of on-time payments before refinancing
- Your car typically needs to be worth more than the loan balance
- Credit unions are good sources for refinance loans
- Every 30-40 point score improvement can drop your rate 1-2%
The Bottom Line
Auto loan rates are directly tied to credit scores. The math is simple:
- 700+ score: You'll get competitive rates (6-8%)
- 620-699: Expect higher rates (9-13%)
- Below 620: Rates get expensive fast (13%+)
If you can wait 3-6 months to improve your credit before buying, you could save thousands in interest. Use that time to boost your score with free methods.