Buying a Car Based on Your Credit Score

So, you want to buy a new car? This can be an exciting or downright stressful experience. There’s dealing with pushy salespeople and shopping around for the perfect ride. However, if you have a good credit score, you may have a more pleasurable car buying experience. Why? Well, because obtaining an auto loan has a lot to do with your credit rating.

Buying a Car with Excellent Credit

Excellent credit means good deals and interest rates on auto loans. What’s an excellent credit score? If your credit score is above 720, then you’re most likely to have the best car buying experience.

Credit unions usually have better interest rates than banks or car dealerships. If you’re a member of a credit union, you should check out their auto financing options first.

Sometimes you may be able to find dealerships that offer zero percent financing. This offer is usually only extended to those with excellent credit. This is a good deal that you should take, except if the interest rate rises after a few months.

Buying a Car with Good Credit

With good credit, you may not receive the same sweet deals as you would if you had excellent credit, but you can still secure a pretty decent interest rate on an auto loan. A 2-3% interest rate isn’t unheard of for people with a credit score between 680 and 720.

Buying a Car with Fair Credit

If your credit isn’t the best, but not the worst, you may start having a hard time financing an automobile with a decent interest rate. Most banks won’t extend financing if your credit score is at the lower end of the 620-680 spectrum.

Buying a Car with Poor Credit

Having bad credit usually means you’ll have a more difficult car buying experience. Those of you with a credit score below 620 may be forced to purchase a vehicle through an auto dealer who handles high-risk loans.

You can expect to pay high-interest rates and some dealers that offer in-house financing won’t report your payment activity to the credit agencies. This means that even if you make all of your payments on time, it won’t have a positive effect on your credit rating.


If you have good credit you shouldn’t have much trouble securing an auto loan with a favorable interest rate. Having a credit score greater than 720 means that you may be able to pay no interest on an auto loan. However, those of you with poor credit may be forced to pay high-interest rates at dealerships that provide in-house financing options.

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