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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Hey there, credit-curious friend!
So, you’re wondering if a 589 credit score is enough to get you behind the wheel of your dream car? Well, buckle up because we’re about to take a deep dive into the world of auto loans and how your credit score plays a crucial role.
Spoiler alert: While a 589 credit score isn’t ideal, it doesn’t necessarily mean you’re out of the race.
Let’s break it down:
1. What Does a 589 Credit Score Mean?
First things first, let’s understand what a 589 credit score actually means. According to the credit experts at Upstart a 589 falls into the “Fair” category. This means you’re doing okay, but there’s definitely room for improvement.
2. How Does a 589 Credit Score Affect Auto Loan Rates?
Now, let’s talk about the impact of your 589 credit score on auto loan rates Unfortunately, a fair credit score often translates to higher interest rates.
Here’s a quick comparison:
- Prime credit (720+ FICO score): Average APR of 5.34% on a 60-month new auto loan.
- Fair credit (580-669 FICO score): Average APR of 11.76% on a 60-month new auto loan.
3. Can You Still Get an Auto Loan with a 589 Credit Score?
Absolutely! While you might face higher interest rates, a 589 credit score shouldn’t prevent you from getting an auto loan. However, lenders will likely consider you a higher-risk borrower, requiring strong qualifications in terms of income, employment, and existing debt.
4. Tips for Getting an Auto Loan with a 589 Credit Score:
- Shop around: Compare rates from multiple lenders to find the best deal.
- Consider a co-signer: Adding a co-signer with good credit can improve your chances of approval and secure a lower interest rate.
- Make a larger down payment: Putting more money down can reduce your loan amount and monthly payments, making you a more attractive borrower.
- Focus on improving your credit score: This will not only help you qualify for better auto loan rates but also benefit you in other financial aspects.
5. Additional Resources to Help You:
- Upstart: Upstart offers personal loans for borrowers with less-than-perfect credit, including those with fair credit scores. They consider more than just your credit score, which can help you secure a loan with a lower interest rate.
- Credit Karma: Credit Karma provides free credit scores and reports, along with personalized tips on how to improve your credit.
- Consumer Financial Protection Bureau (CFPB): The CFPB offers information and resources to help consumers understand and manage their credit.
6. Remember, It’s a Marathon, Not a Sprint
Improving your credit score takes time and effort, but it’s definitely worth it. A high credit score will provide you access to reduced insurance costs, better interest rates, and more opportunities to reach your financial objectives.
So, keep up the good work, and don’t hesitate to reach out to these resources for help along the way.
Bonus Tip: Keep an eye on your credit score regularly. You can get your free credit score and report from Upstart, Credit Karma, or other reputable sources. This will help you track your progress and identify areas where you can improve.
Remember, a good credit score is a valuable asset. Take care of it, and it will take care of you!.
P.S. If you have any questions about credit scores or how to improve yours, feel free to leave a comment below. We’re always happy to help!
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.
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.
Can I buy a car with a 600 credit score?
FAQ
What can I get approved for with a credit score of 589?
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Type of Credit
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Do You Qualify?
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Secured Credit Card
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YES
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Unsecured Credit Card
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YES
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Home Loan
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YES (FHA Loan)
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Personal Loan
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MAYBE
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What is the lowest credit score to buy a car?
What credit score do I need to buy a $20000 car?
Is 585 a good credit score to buy a car?
What does a 589 credit score mean?
A 589 credit score can be a sign of past credit difficulties or a lack of credit history. Whether you’re looking for a personal loan, a mortgage or a credit card, credit scores in this range can make it challenging to get approved for unsecured credit, which doesn’t require collateral or a security deposit.
What credit score do you need for a car loan?
Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.
Can I get a car loan with a low credit score?
Terms may apply to offers listed on this page. Some loan types — like mortgages and personal loans — require a borrower to have a minimum credit score. Auto loans are different. It is possible to qualify for a car loan with any credit score, although the lower your credit score, the higher the interest rate you can expect to pay.
What is a good credit score for a new car?
For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments. Lower credit scores may result in less-than-favorable loan terms for the car you want to buy.