660 Credit Score Car Loan Interest Rate – You’ve shopped for cars, gone for a test drive, and found the perfect vehicle. But are you eligible for an auto loan? Before you get approved, the lender pulls your credit report to determine your creditworthiness. Your credit report and credit score help them decide whether to give you a loan and at what interest rate.
Lenders can choose between many credit scoring models and multiple credit bureaus. So what credit scores do car dealers typically use?
660 Credit Score Car Loan Interest Rate
When you apply for an auto loan, a lender will likely use one of the following credit score versions: FICO® Auto Score, Base FICO® Score, or VantageScore®. The FICO® score is used by 90% of the top lenders and the VantageScore® credit score is used by 9 of the 10 largest banks.
Car Loan Rates
The FICO® Auto Score is an industry-specific score that focuses on your ability to repay a delinquent auto loan. For example, late payments (or other negative information) on past auto loans can hurt your FICO® Auto Score more than other derogatory items.
Instead of the traditional 300-850 credit score range, the FICO® Auto Score consists of a 250-900 scale. A higher FICO® Auto Score indicates lower credit risk – just as a higher score means lower risk under other credit scoring models. With a higher score, you’re more likely to qualify for car financing and get a better interest rate based on each auto lender’s criteria. Each individual lender also determines other financial information to consider in their credit review process.
Lenders use multiple versions of the FICO® Auto Score. (Think of the many versions of smartphone software, and how some users update their operating systems while others use older options.)
The latest version (as of this writing), FICO® Auto Score 10, was introduced in 2020. However, many auto lenders still use FICO® Auto Score 2, FICO® Auto Score 4, FICO® Auto Score 5, and FICO® Auto Score. 8.
What Is A Good Credit Score To Buy A Car?
A basic FICO® score predicts how likely you are to make a late payment on any debt obligation in the next 24 months. They indicate the traditional score range of 300-850.
Lenders use different versions of the basic FICO® score. FICO® Score 10 is the most recent (as of this writing). But the FICO® 8 Score, introduced in 2009, remains the most widely used version.
In 2006, a new credit scoring option became available – VantageScore®. The VantageScore® credit score was born out of a collaboration between the three major credit bureaus.
The two latest versions of the VantageScore® credit score (3.0 and 4.0) have an industry-standard credit score range of 300-850. Older VantageScore® models ranged from 501-990.
Average Auto Loan Rates By Credit Score
VantageScore® is becoming increasingly popular among auto lenders. The 2019 VantageScore® Market Study Report revealed that auto lenders used nearly 131 million VantageScore® credit scores between July 1, 2018 and June 30, 2019.
Your credit score varies by credit scoring model and credit bureau. Various companies will reveal your credit score, often for a fee. For example, you can get your FICO® Score 8 from Experian for free, or your VantageScore® 3.0 for $7.95. Equifax will reveal your FICO® 5 score based on its report for $14.95 per month and TransUnion will share your VantageScore® 3.0 based on its report for $24.95 per month. VantageScore offers free credit score reports from some providers.
FICO® offers an “Advanced” plan that provides 28 FICO® scores, including auto, mortgage and loan versions, as well as a bureau credit report and other services for $29.95 per month. FICO® also offers other plans, so if you believe you need the service, be sure to check the pricing page to determine the best option for you. You can request a free copy of your credit report from each credit reporting company every 12 months at annualcreditreport.com.
Even if you don’t know which model your lender uses, it’s important to understand roughly what your credit score is and how it affects your interest rate.
Average Used Car Loan Interest Rates In 2023
There are three major credit bureaus that compile your credit history into credit reports: Equifax, Experian and TransUnion. Lenders can use any credit bureau to determine your creditworthiness.
There is no definitive answer as to which credit bureau is used the most for auto loans and it can vary due to several different factors in how each lender reports to each credit bureau. While most do, lenders are not required to report to every credit bureau, which means there is no guarantee that your credit information will be the same at all three credit bureaus.
Lenders will look at your credit score to determine whether to approve a car loan application, but it’s not the only factor. They will also consider your debt-to-income ratio; Personal information such as how long you have been at your current address or whether you work for your current employer; and the amount of down payment you wish to make.
You may still be able to buy a new car with bad credit, but if you’re approved, the above factors will affect your loan terms, your monthly payment amount, and your interest rate. Remember to be mindful of your budget and evaluate used car options. While a luxury car may look impressive, a functional utility model may better fit your budget and credit rating.
Best Auto Loan Rates Of September 2023
According to the Consumer Financial Protection Bureau (CFPB), your credit score is one of many other factors that affect your interest rate. Your interest rate may fluctuate based on your credit history, loan amount, the type of car you buy, and the term of the loan.
If you are in the “fair” or “very poor” credit score range, you may want to try to raise your score before applying for a car loan. Borrowers with fair credit may be considered subprime borrowers and are unlikely to receive the best terms if their loan is approved. Those with very poor credit may be rejected outright, or face higher loan rates and additional fees even if they are approved.
This chart details the average interest rate by credit score for a new or used auto loan. According to Experian’s latest data for Q4 2021, you can see that it categorizes borrowers into five risk categories based on their credit scores: deep subprime, subprime, nonprime, prime, or super prime.
Disclaimer: All rates are subject to change and lenders may have different categories and scoring models. Please use this strictly as a guide.
Credit Score: Is It Good Or Bad?
A lender may view a borrower with a low credit score as a high risk and demand a higher down payment. However, this can work to your advantage as you have a smaller loan to pay off. If you can afford a larger down payment, you can save some money by paying less interest overall, even with a higher rate.
Before you decide to buy a car, it’s helpful to understand the factors that go into calculating your credit score. Then you can adjust your financial activities to build credit.
Your payment history is the most important factor in your credit score, accounting for 35% of your FICO® score. Making loan payments on time — whether they’re personal loans, student loans or payments to credit card issuers — is an important step to take to improve your credit score.
Your credit utilization ratio is the second largest factor in calculating your FICO® score, accounting for 30%. This is the amount of credit card debt on all your credit cards divided by their combined credit limit.
Ways To Lower My Car Loan Interest Rate?
If you have $2,000 in debt on three credit cards with a total limit of $5,000, your credit utilization is 40%; Experts suggest keeping it below 30%. Having a high credit utilization can negatively affect your credit score and lenders see you as a risky borrower.
Errors occur on credit reports more often than you think. Numbers are transferable; Accounts may be open, late or incorrectly reported; Balances may be inactive; And fraud can happen. One FTC study found that 1 in 4 consumers found errors on their credit reports that could affect their scores.
Fortunately, you can dispute any inaccurate errors. To check for any suspicious entries, you can order a free copy of your credit report at annualcreditreport.com.
New credit or applying for new credit can affect your credit score. When applying for new credit, one of the three major credit bureaus will make an inquiry on your credit report. Depending on which bureau the lender uses, and other factors on your report, this test may lower your score by several points. However, according to FICO®, if you apply for multiple car loans within a short period of time (typically 45 days) it will count as one hard inquiry; This principle also applies to shopping for a mortgage loan.
Credit Score Ranges Explained
If you think you’re in the market for a car, it’s a good idea to build your credit early. It may be more helpful to focus on general credit habits rather than trying to achieve a specific score. Building credit takes time, so be patient
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