minimum credit score to qualify for a car loan

If you’re in the market for a new or late model used car, you may be in for a rude shock when you shopping to pick one out.  The minimum credit score required to qualify for the very best car loans has been raised recently.  And so have the credit scores to qualify for even a higher interest loan.  In other words, unless you’ve got really good credit, you’re going to be making higher payments these days than you would have a year ago for the very same car.  This doesn’t mean you can’t get a car loan, but you should be aware of your credit score before you go car shopping.

This is all because of the massive credit crunch that’s going on in America.  Basically, America’s banks and car manufacturers are discovering that they gave out far too many loan to far too many people who will never be able to pay them back over the past several years.  The problem hit mortgage bankers first, but it’s now hitting the car loan industry, and hard.  They now realize that they let their minimum credit score requirements for car loans get too lax, and they’re reacting by raising them back up to closer to the historical standards.

What does this mean for you in real terms?  Well, you’ve probably noticed you’re not hearing any radio ads from car dealers screaming about poor credit and bankruptcy being no problem.  Those days are gone.  And no more “nothing down” deals, either.  You’ll need at least 10% down at most shops.  And, to qualify for the very best loans, the minimum credit score is a 700 at many dealers.  If your credit score is between 600 and 700, you can still get a loan, but you’ll have a higher interest rate.  Much below 600 though, and you’re going to find it very difficult to get a car loan except at a Buy Here Pay Here lot.  So, if you’re looking for a car, it’s imperative that you raise your credit score as much as possible.