If you’ve got bad credit and you’re looking for a car loan, you may wonder what the credit score cutoff is to get approved. Fortunately, lending isn’t a perfect science. Even if you have rock bottom credit, you could still have auto loan options.
Minimum Credit Scores for Car Loans
The minimum credit score required for a car loan depends on a lot of factors, including your individual credit score, the lender, your income, and many other things. Just because you can’t get approved with one lender, doesn’t mean you’re out of luck. There are options for those with less than perfect credit because some lenders look at several stipulations before making their decision.
When you need a car loan, lenders typically use your FICO credit score to determine eligibility. Your FICO score is a three-digit number between 300 and 850 – the higher the better. If you have no credit, this doesn’t mean your score is zero or even 300; it usually means that it’s somewhere in the lower-middle.
At one time, borrowers with bad credit scores were rarely approved for auto loans. They were left to buy older vehicles from private parties or buy here pay here lots. Those with good or great scores were approved for car loans from banks and dealerships. That’s not the case now, because there are additional options for bad credit borrowers.
Some dealers are now tapping into the market of bad credit auto loans and establishing special financing departments. Because of this, borrowers with credit scores below the usual minimum now have more opportunities for vehicle financing. If you’re looking to see what your credit score is, our trusted partner can assist you here.
People with credit scores above 670 don’t usually have much of an issue getting approved for a car loan. If you find yourself with a score below this, you’re in what’s often called the subprime range. With these lower credit scores, you may have difficulty getting approved for a traditional auto loan, but you may be eligible for a subprime car loan. With subprime auto lending becoming more available, if your score is below 670, it no longer means you’re completely out of luck in getting approved for a car loan.
How Does Subprime Auto Lending Work?
Subprime auto lending was created for borrowers with imperfect credit. Subprime lenders know that borrowers are more than just a three-digit number, so they evaluate other factors to determine eligibility. Usually, subprime car loans are for those in the 500 to 650 range. While there isn’t a hard-and-fast minimum on what your credit score needs to be for a subprime auto loan, there are still other requirements that need to be met.
Using your income, work history, and overall stability, bad credit lenders use these aspects to consider approval. The income requirement is usually a minimum of $1,500 to $2,000 a month (gross pay).
These lenders also require a down payment, usually at least 10% of the vehicle’s selling price or $1,000, whichever is lower. Subprime lenders will also accept a trade-in as part, or all, of the down payment requirement.
You should also expect other requirements, such as: proof of a working phone, proof of residence, proof of income, a list of personal references, and a valid driver’s license. There may be more, but those are the most common ones.
How to Find Special Financing
Even if your credit score is down in the dumps, subprime auto financing could be your next step. If you meet the lender’s requirements, you could be looking at a loan approval for your next car – without needing to meet the traditional minimum credit score requirement.
At Auto Credit Express, we’ve created a web of dealerships with special finance departments nationwide, which have helped bad credit borrowers get back on the road. To get matched to a dealer in your local area, fill out our auto loan request form. It's free, and there’s never an obligation to buy.