In summary, having less-than-ideal credit may not prevent you from obtaining a car loan, but it may have an impact on the interest rate and other loan conditions. Generally, the lower your credit scores, the higher your interest rate will be. However, there might be methods to obtain a better rate, such as obtaining a co-signer or making a down payment. Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect.
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The short answer is: yes, 650 is a good credit score for a car loan. While it’s not the best, it’s certainly not the worst. In fact it falls within the “fair” credit score range which means you’ll be eligible for a variety of loan options. However, it’s important to understand that your credit score is just one factor that lenders consider when determining your interest rate and loan terms. Other factors include your income, debt-to-income ratio, and the type of car you’re financing.
What to Expect with a 650 Credit Score:
- Higher Interest Rates: Compared to borrowers with higher credit scores, you’ll likely be offered higher interest rates on your car loan. This means you’ll pay more in interest over the life of the loan, which can add up to a significant amount of money.
- Limited Loan Options: You may not be eligible for the best loan terms, such as low down payments or long loan terms. This means you may need to make a larger down payment or choose a shorter loan term, which can increase your monthly payments.
- Fewer Lenders: Not all lenders offer loans to borrowers with fair credit scores. This means you may have to shop around to find a lender that’s willing to work with you.
Tips for Getting a Car Loan with a 650 Credit Score:
- Shop Around: Compare loan offers from multiple lenders to find the best rates and terms. Don’t just accept the first offer you receive.
- Make a Larger Down Payment: A larger down payment will lower your loan amount, which can help you qualify for a lower interest rate.
- Choose a Shorter Loan Term: A shorter loan term will result in higher monthly payments, but you’ll pay less interest over the life of the loan.
- Consider a Cosigner: If you have a friend or family member with good credit, they may be willing to cosign your loan. This can help you qualify for a lower interest rate and better loan terms.
Alternatives to a Car Loan:
- Save Up for a Car: If you can wait, saving up for a car can be a great way to avoid taking on debt. This will give you time to improve your credit score, which can help you qualify for a better loan in the future.
- Buy a Used Car: Used cars are generally less expensive than new cars, which can make them a more affordable option if you have a limited budget.
- Lease a Car: Leasing a car can be a good option if you don’t want to deal with the hassle of selling a car when you’re done with it. However, it’s important to remember that you won’t own the car at the end of the lease term.
The Bottom Line:
Getting a car loan with a 650 credit score is possible, but it’s important to be prepared for higher interest rates and limited loan options. By shopping around, making a larger down payment, and considering a cosigner, you can increase your chances of getting a good deal on a car loan. However, if you’re not comfortable with the terms you’re offered, you may want to consider saving up for a car or buying a used car instead.
Ways to increase your odds of approval and a better interest rate
There are a few actions you can take gradually to improve your chances of being approved for a loan or being eligible for better terms and a lower interest rate if you’re in the market for a new car now or in the near future.
Car loan rates by credit score
Based on Experian data from the fourth quarter of 2022, this table displays the average auto loan rate for both new and used cars.
| Deep subprime (300–500) | Subprime (500–600) | Nonprime (600–660) | Prime (661–780) | Super prime (781–850) | |
|---|---|---|---|---|---|
| New | 13.42% | 10.79% | 8.12% | 5.82% | 4.75% |
| Used | 20.62% | 17.46% | 12.08% | 7.83% | 5.99% |
As you can see, if your credit score is good (i.e., “prime” or “super prime”), you will pay less for your loan than if it is average or lower. And having poor credit (considered “deep subprime”) means you’ll pay high interest rates.
Even though a few extra percentage points might not seem like much, they quickly add up when applied to the thousands of dollars that auto loans typically cost.
Here’s how this plays out in reality. Assume that two borrowers, one prime and the other subprime, wish to borrow $10,000 to purchase a used car. They both have a 60-month loan term. The subprime borrower is offered a 17. According to Experian, the average rate for borrowers in this range in the fourth quarter of 2020–2022 was 46%. The prime borrower is offered the average 7. 83% rate.
Over time, the subprime borrower will pay back about $15,060, or $5,060 in interest. The prime borrower will pay about $2,117 in interest, for a total cost of $12,117. That’s a difference in interest paid of roughly $2,943. In this instance, credit scores were the deciding factor.
By taking action to raise your credit score, you may be able to receive a better loan with more favorable terms, ultimately putting more money in your pocket.
KEY FACTORS You Need to Know about Credit Scores and Car Loans (Former Dealer Explains)
FAQ
What kind of car loan can you get with a 650 credit score?
How much loan can I get with a 650 credit score?
Can I lease a car with a credit score of 650?
What credit score do you need for a 30000 car loan?
Can you finance a car with a 650 credit score?
Yes, it’s possible to get a car loan with a 650 credit score, although your rates might not be as good as those for an applicant with better credit. If you shop around and aren’t happy with the interest rates you’re quoted, you might consider working on your credit before taking out a loan.
Can I get a loan with a 650 credit score?
If you have a 650 credit score you may be eligible for a loan but you might not get a favorable interest rate yet. With a credit rating of 600 to 650, the interest rate can be as high as 25-30%. In that case, you must make a down payment of at least 20% of the total amount.
Is 650 a good credit score?
As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The “good” credit range starts at 690.
What credit score do you need to get a car loan?
These indicators determine 60-70% of the total score. What Car Loan Can I Get With A 650 Credit Score? If you have a 650 credit score you may be eligible for a loan but you might not get a favorable interest rate yet. With a credit rating of 600 to 650, the interest rate can be as high as 25-30%.