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Yo, credit score fam!
Ever wondered if you can snag a car loan with a credit score of 500? Well, buckle up, because we’re about to drop some knowledge bombs on you.
Here’s the lowdown:
- It’s totally possible to get a car loan with a credit score of 500. But, like, it’s not gonna be a walk in the park. You’ll likely face higher interest rates and stricter terms compared to those with stellar credit scores.
- The average interest rate for a new car loan with a credit score of 500 was 14.08% in Q1 2023. For used cars, it was even higher at 21.32%. (Source: Experian State of the Automotive Finance Market report)
- There are things you can do to improve your chances of getting a car loan with a 500 credit score. These include making a larger down payment, getting a co-signer with good credit, and shopping around for the best rates.
Let’s dive deeper into the nitty-gritty:
What to Expect with a 500 Credit Score
- Higher interest rates: Be prepared to pay more for your car loan. This means higher monthly payments and more money out of your pocket in the long run.
- Stricter terms: Lenders may require a larger down payment or shorter loan term to offset the risk of lending to someone with a lower credit score.
- Limited lender options: You may not be able to get a loan from a traditional bank or credit union. You may need to look for a subprime lender, which typically charges higher interest rates.
How to Improve Your Chances
Even with a 500 credit score, there are things you can do to increase your chances of getting a car loan:
- Make a larger down payment: This will show the lender that you’re serious about repaying the loan and reduce the amount of money you need to borrow.
- Get a co-signer with good credit: This can help you qualify for a lower interest rate and better terms.
- Shop around for the best rates: Compare offers from multiple lenders to find the best deal.
- Improve your credit score: This is the best long-term solution. Pay down your debts, make your payments on time, and avoid opening new credit accounts.
Additional Resources
- Bankrate: What Credit Score Do You Need to Buy a Car?
- Toyota Direct: Can I Get a Car Loan with a Credit Score of 500?
Remember, getting a car loan with a 500 credit score is possible, but it’s important to be prepared for the challenges. By following the tips above, you can increase your chances of getting the best possible deal.
Now go forth and conquer the car loan game!
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It’s crucial to think about your credit score and how it will impact your spending before you visit the dealership to purchase a new vehicle. Lenders use your credit score as an indication of how likely you are to repay a loan. This means that the higher your credit score, the more favorable your interest rate and terms will be.
To be eligible for a traditional auto loan, you generally need a FICO credit score of at least 600, though each lender has a different minimum credit score requirements. It might be harder, but not impossible, to get a subprime auto loan when interest rates rise as a result of inflation.
About 5% of all financing fell into the subprime category, according to Experian data from the fourth quarter of 2023, with a personal FICO score between 501 and 600. If your credit score is below prime, you may need to look for a bad credit car loan. These typically have higher interest costs than traditional auto financing.
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Can I get a car loan with a credit score of 500?
FAQ
How hard is it to get a car with a 500 credit score?
What is the lowest credit score to buy a car?
How big of a loan can you get with 500 credit score?
|
Lender
|
Loan Amounts
|
APRs
|
|
Oportun
|
$300 – $18,500
|
10.07% – 35.95%
|
|
OneMain Financial
|
$1,500 – $20,000
|
18% – 35.99%
|
|
RISE
|
$500 – $5,000
|
60% – 299%
|
|
Jora Credit
|
$500 – $4,000
|
99% – 349%
|
Can I buy a car with 520 credit score?
Can you get a car loan with a credit score of 500?
It’s possible to get a car loan with a credit score of 500, but it’ll cost you. People with credit scores of 500 or lower received an average rate of 14.08% for new-car loans and 21.32% for used-car loans in the first quarter of 2023, according to the Experian State of the Automotive Finance Market report.
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 you get a car loan without a good credit score?
Lenders base your interest rates primarily on your credit score. But you can still get a decent rate without top-tier credit. To see how much of a difference a higher credit score can make for your rates, check out the average car loan interest rates by credit score. Your hometown also impacts the rate you receive.
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.