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Buying a car is a huge financial step, and knowing your credit score can help you enter the buying process on strong footing. A first-quarter 2024 report by credit bureau Experian found that almost 69% of cars financed were for borrowers with credit scores of 661 or higher.Experian Information Solutions . State of the Automotive Finance Market Q1 2024. Accessed May 30, 2024.View all sources
The report also found that on average, the credit score for a used-car loan was 686, while the average score for a new-car loan was 755.
A lower credit score won’t necessarily keep you from securing a car loan, but it might spike your interest rate, leading to higher payments.
Getting a car loan when you have less-than-perfect credit can feel daunting. You may worry about getting approved, and if you are, that it will come with sky-high interest rates. However, a credit score of 622 is right on the edge of what most lenders consider “fair” credit. With the right preparation and research, buying a car with a 622 credit score is very doable.
As an example, my credit score is currently 622 In this article, I’ll share my own experience and research to explain what options are available at this credit score range, and how to get the best auto loan possible
What is Considered a Good Credit Score for an Auto Loan?
There’s no one magic number that guarantees you’ll qualify for an auto loan Every lender has their own lending criteria However, scores above 620 often fall into the “fair” credit tier, meaning approval is likely if other factors look good.
According to NerdWallet, the average credit score for a new car loan is around 755. For a used car it’s slightly lower – around 686.
So with a score of 622, you may not get the rock-bottom interest rates reserved for people with excellent credit. But you can still likely get approved for financing if you shop around.
Here is a breakdown of average auto loan interest rates by credit score range:
| Credit Score Range | Average New Car Loan Rate | Average Used Car Loan Rate |
|---|---|---|
| Nonprime (620-659) | 8.86% | 13.28% |
| Prime (660-719) | 6.40% | 8.75% |
| Super prime (720+) | 5.18% | 6.79% |
As you can see, buyers with credit scores in the low to mid 600s tend to pay interest rates around 9-13% on average. That’s higher than those with scores above 720, but still manageable depending on the size of your loan.
How to Get the Best Auto Loan Rates With a Credit Score of 622
The interest rate you pay has a huge impact on the total cost of your loan. Here are some tips to make sure you get the most favorable rate possible:
Check your credit reports. Before applying for a car loan, pull your credit reports from AnnualCreditReport.com and dispute any errors. This can give your score a quick boost.
Compare preapproval offers. Get rate quotes from multiple lenders including banks, credit unions, and online lenders. This allows you to compare your options side-by-side.
Ask about first-time buyer programs. Some credit unions and lenders offer special auto financing programs for first-time buyers with thin credit files. These can offer lower rates than traditional loans.
Consider a co-signer. Adding a co-signer with good credit can help you qualify for a much lower interest rate. Just make sure the co-signer understands the obligation they are taking on.
Shop for pre-owned vehicles. Interest rates are generally lower on used cars versus new. Opting for a pre-owned model just a few years old can mean big interest savings.
Make a larger down payment. The more money you put down upfront, the lower your rate is likely to be. Even 10-20% down can make a noticeable difference.
Improve your credit. If your score is on the low side, postponing your purchase to improve your credit can really pay off via lower interest costs over the life of your loan.
Ask the dealer to try multiple lenders. Dealers have relationships with many lenders and can shop your application around to find you the best rate.
Sample Auto Loan Terms at a 622 Credit Score
To give you a better idea of what to expect, here are some estimated loan terms on a few different vehicle purchase amounts:
$15,000 used car purchase
- Loan amount: $15,000
- Down payment: $1,500 (10%)
- Interest rate: 10%
- Term: 60 months
- Monthly payment: $283
$20,000 used car purchase
- Loan amount: $18,000
- Down payment: $2,000 (10%)
- Interest rate: 11%
- Term: 60 months
- Monthly payment: $376
$30,000 new car purchase
- Loan amount: $27,000
- Down payment: $3,000 (10%)
- Interest rate: 12%
- Term: 72 months
- Monthly payment: $456
As you can see, the longer the loan term and higher the amount borrowed, the steeper your monthly payment will be. That’s why it pays to carefully consider how much vehicle you can comfortably afford.
Alternatives if You Can’t Get Approved for an Auto Loan
If your credit score is below 620 or you get turned down by multiple lenders, you may need to explore other options, such as:
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Save up to buy a car with cash: Avoid financing completely by saving up money to buy a used car outright.
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Ask a relative for a family loan: Borrowing from a family member may provide more flexible terms than a bank. Draw up a written agreement.
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Try peer-to-peer lending: Sites like Upstart connect borrowers and investors. Rates can be high but approval is possible with poor credit.
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Use a co-signer: Asking a creditworthy co-signer to apply with you makes approval much more likely.
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Try buy here pay here dealerships: These dealers finance cars themselves for buyers with poor credit, but rates are exceptionally high.
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Build your credit: Take 6-12 months to improve your score before reapplying. Pay all bills on time, lower balances, and correct errors.
The most important things are being patient and not rushing into a car loan that doesn’t fit your budget. With time and perseverance, car ownership is achievable even with a credit score of 622.
common questions about 622 credit score auto loans
If you have a credit score of 622 and are looking to finance a car, you probably still have plenty of questions. Here I’ll try to address some of the FAQs for buyers in your shoes:
What are the odds of getting approved with a 622 credit score?
Approval odds are generally good above 620, as long as other factors like income and history look reliable. Shop around with a few lenders to increase your chances.
Will I need a down payment?
Most lenders will require at least some down payment, even if it’s just 10 or 20%. The larger your down payment, the better your loan terms will likely be.
What credit score do most lenders look for?
Each lender sets their own cut-off, but scores of 620+ are often minimum requirements. The “good” credit range starts around 670 for most lenders.
Should I apply directly or go through the car dealership?
Applying directly with banks or credit unions can sometimes get you better rates. But dealers also have relationships with many lenders and can help find you financing.
How can I get a car loan with bad credit and no co-signer?
Without a co-signer, your best bets are dealerships specializing in bad credit financing, peer-to-peer lending sites, or waiting to improve your credit.
How long will I have to wait after a car repossession before I can qualify again?
Most lenders want to see at least 1 year of clean credit after a repossession before considering another auto loan. Meeting payments on time helps demonstrate you’ve moved past it.
Should I pay off a loan before trading in for another car?
If possible, it’s best to pay off your current car loan completely when getting another. Having an existing auto loan can make approval harder and rates higher.
Can I get a car loan after bankruptcy/foreclosure?
Yes, lenders will still consider car loans after bankruptcy and foreclosure. Interest rates will be higher, but after 1-2 years of responsible credit you can qualify again.
The Bottom Line
A credit score of 622 puts auto loan approval within reach with the right preparation. Spend time researching your options, comparing rates, and positioning yourself to apply for the most favorable financing terms. While interest rates will be higher than borrowers with very good credit, they should still be manageable for most buyers depending on the size of the loan.
With a steady income, some funds for a down payment, and smart rate shopping, owning a car is a realistic goal. By making payments on time and keeping credit utilization low, you can also use the car loan as an opportunity to continue improving your credit over time.
What minimum credit score is needed to buy a car?
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.
Borrowers with scores of 501 to 600 account for more than 13% of cars financed, while people with scores of 500 or below account for about 2%, according to Experian.
Bring documents showing financial stability
If your credit score is low, potential lenders are less likely to see you as a risk if they can see you have stability in other areas of your financial life. Bringing documentation like your most recent pay stubs and proof of address to show lenders how long you have lived at your current address and worked at your employer could help you seem more reliable.