If youre struggling to raise your credit score and buy a car, youre not alone. Keep reading to find out what car loan you can get with a 650 credit score.
Credit scores fluctuate naturally throughout life. When you have a lot of debt, like when you apply for a mortgage or car loan, your score may be lower; as you pay off debt, it may rise. Unfortunately, it might not be the best timing for your high and low credit scores, particularly if you have a credit score of 650 and are thinking about getting a car loan. You might be wondering if your score will prevent you from getting a loan and how it will affect the interest rate that you are given.
Your credit score of 650 puts you 10 points above the required minimum for a FINN car subscription. FINN offers a range of vehicles you can choose from, including SUVs, trucks, electric cars, and premium sedans. Your monthly subscription fee from FINN includes all maintenance, registration, insurance, and depreciation costs, so your only expenses will be gas and the occasional car wash. Additionally, FINN will deliver the make and model of your choice right to your door so you can begin your subscription journey right away.
Navigating the world of car leases can be tricky, especially if you have less-than-perfect credit. But fear not, aspiring drivers! Leasing a car with a 665 credit score is absolutely possible, though it might require some extra strategizing and flexibility.
Understanding the Credit Score Landscape for Car Leases
While there’s no official minimum credit score for car leases, most lenders prefer borrowers with scores of 680 or higher. This is because a higher credit score indicates a lower risk of defaulting on payments, making you a more attractive candidate for favorable lease terms.
Though you might not be eligible for the best offers, there are lenders that work with borrowers who have lower credit scores, so you still have options even with a 665 credit score!
Here’s what you need to know:
- Expect higher costs: With a lower credit score, you’ll likely face higher interest rates and potentially larger down payments. This means your monthly lease payments will be higher, and you’ll have less money to put towards other expenses.
- Limited car choices: Your selection of vehicles might be more restricted compared to borrowers with higher credit scores. You might not be able to snag the latest and greatest models, but there will still be plenty of reliable and fuel-efficient options available.
- Shop around: Don’t settle for the first offer you receive. Compare lease terms from multiple lenders to find the best deal for your budget and credit score.
- Consider a cosigner: If you have a friend or family member with good credit, adding them as a cosigner can significantly improve your chances of approval and potentially lower your interest rate.
Strategies for Boosting Your Chances of Approval
Even though it’s impossible to instantly raise your credit score, there are things you can do to increase your chances of being granted a car lease if your credit score is 665 or lower:
- Pay down debt: Reducing your credit utilization ratio (the amount of credit you’re using compared to your available credit) can significantly boost your score. Aim to keep your utilization below 30%.
- Dispute errors: Check your credit reports for any errors and dispute them with the credit bureaus. Even small errors can negatively impact your score.
- Make on-time payments: This is crucial for building a positive credit history. Set up automatic payments to ensure you never miss a due date.
Alternatives to Consider
If leasing with a 665 credit score proves challenging here are some alternative options:
- Buying a used car: Used cars are generally more affordable than new cars, and you might find a great deal with a lower credit score.
- Getting a personal loan: You can use a personal loan to finance the purchase of a used car. This option might offer lower interest rates compared to car loans for borrowers with lower credit scores.
- Leasing with a down payment: Making a larger down payment can offset the risk associated with your lower credit score and improve your chances of approval.
The Bottom Line: Leasing with a 665 Credit Score is Possible
While leasing a car with a 665 credit score requires some extra effort, it’s definitely achievable. By understanding the landscape, strategizing effectively, and exploring alternatives, you can secure a car lease that fits your budget and needs
Remember, the key is to be proactive, do your research, and negotiate for the best possible deal. With a little planning and persistence, you’ll be cruising in your new car in no time!
Can you refinance a car loan if you have a credit score?
After starting the loan agreement, you can frequently refinance your credit score to benefit from lower interest rates or a higher credit score. If you move the needle past 650 to increase your credit score, consider refinancing for the following reasons:
- You’ve lowered your debt
- Your income has increased
- You want to see if better rates exist
- For an even lower monthly payment, you would like to extend the terms of your loan.
However, you should also weigh the drawbacks of refinancing as listed below:
- You’re close to paying off your car loan
- You don’t want to keep your car for much longer
- The fees outweigh any savings you’d receive
- You want to apply for credit soon
Ultimately, it’s up to the calculations to determine which route works best financially. Crunch the numbers and carefully consider whether refinancing will help or hurt your cause.
What interest rate can you get with a 650 credit score?
Current interest rates for borrowers with a 6500 credit score are approximately 2013 percent for used cars and 9 percent for new cars, respectively, as shown in the table below:
|
Credit Score Category |
Average Used Car Rate |
Average New Car Rate |
|
Poor (below 579) |
±21% |
±14% |
|
Fair (580 to 619) |
±18% |
±11% |
|
Good (620 to 659) |
±13% |
±9% |
|
Great (660 to 719) |
±8% |
±6% |
|
Excellent (720 and above) |
±7% |
±5% |
If you were to finance a new car for $40,000 at the 9% interest rate, you would be qualified for the loan based on your credit score, which would require you to pay $3,600 in interest fees. Over the course of the loan, the same car would only cost you $2,400 in interest payments if you were to increase the points by just 10. A $40,000 used car will cost you $5,200 in interest if your credit score is 650, and $3,200 if it is 10 points higher. Used cars operate on a similar basis.
How to Lease a Car with Bad Credit
FAQ
Is 660 a good credit score to lease a car?
Can I finance a car with 665 credit score?
What is the lowest credit score to lease a car?
Can I lease a car with 650 credit score?
What credit score do you need to lease a car?
The credit history requirements to lease a car can vary depending on which leasing company you choose to work with. For an idea of what lenders are approving; in the third quarter of 2020, the average credit score to lease a car was 733. Each lender has specific underwriting requirements for lessees to meet and they’re not always public knowledge.
Does your credit score matter if you lease a car?
When you lease a car, your credit score plays a role in the type of vehicle you can get as well as how much you’ll pay. According to Experian data, the average credit score for a car lease in the second quarter (Q2) of 2020 was 729, putting it right in the middle of the “prime” borrower category—those with credit scores of 661 to 780.
Should I lease a car if my credit score is 680?
If your credit score is lower than 680, you might want to work on building it before leasing a car so you get a better deal. A good place to start is by checking your credit report which you can do for free once a year at Annual Credit Report.
Can you lease a car with bad credit?
Even though there’s no official minimum score, most vehicle leasing companies accept a score of 680 or higher. The higher you boost your score, the better deal you’ll be able to get. It’s not out of the question to get approved for a lease with bad credit, but it can be costly.