Credit Score Needed For a Car Loan: It's Lower Than You Think

Credit Score Needed For a Car Loan: It's Lower Than You Think

Posted on June 17, 2022

Are you planning on getting new vehicle anytime soon? Wondering whether you have the required credit score for a car loan? We can help!

Our Cayuga car loan team outlines the various considerations you need to make when looking at credit scores and car loans.

Credit scores and car loans

Your credit history and credit score play a significant part in a car loan application. It influences whether you are accepted for the loan or not and at what rate.

Your credit can make or break a car loan application so is an important factor to consider.

Fortunately, the required credit score for a car loan can be very low depending on the details.

You can get bad credit car loans, car loans immediately after bankruptcy, car loans for if you just arrived in Canada and for if you have a perfect score.

Whatever your situation. Whatever your credit score. If you can afford the repayments, you can get a car loan.

Your credit score

Credit scores are between 300 and 900. Low scores mean bad credit and higher scores mean good. Typically, 300-559 is poor, 560-659 is fair, 660-724 is good, 725-759 is very good and 760-900 is excellent.

You can get a car loan with any of these scores but the lower the score, the higher the interest rate you’ll pay.

Car loans and low credit scores

As mentioned, you can get a car loan with any credit score but it can be expensive.

The lower the score, the more interest will be charged. This is to insulate the lender from potential loss as lower scores are regarded as higher risk.

It’s not personal, it’s just finance. Lower scores typically mean no credit history, so you’re an unknown. Or they can mean historical credit issues, which means a potentially higher lending risk.

Lenders will charge higher interest rates for this type of borrower to mitigate the potential risk of loss.

Car loans and higher credit scores

As your credit score increases, the rates you’ll be charged decrease. This is because you pose a lower potential risk and the lender needs less insulation from loss.

It also typically means being able to borrow more because of that low risk.

Every lender is different so there are no guarantees but this is how it usually works.

Cayuga car loans

Credit scores can influence how much you can borrow and the interest rate you’re charged but won’t stop you accessing credit. It may mean having to work harder to find it but where there’s a will, there’s a way.

If you’re planning on getting a car loan in the near future, our Cayuga car loan team are experts at finding great deals for people with any credit score. Try us and see for yourself!

When you’re ready for a car lease or loan, get in touch with the Ayr auto loan experts at Northway Ford for great deals on auto finance.

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