interest rate auto loan 650 credit score

interest rate auto loan 650 credit score

Buying a car is an exciting investment, but it can come with some challenges, including being approved for a loan and securing a reasonable interest rate. If you’re ready for your next car, you may be worried about what you need when it comes to your credit score for a car loan.

In the second quarter of 2020, the average credit scores on car auto loans were 718 (new cars) and 657 (used cars) according to the Experian Automotive Industry Insights Report. So, does your score have to be 650 or higher to get approved for an auto loan?

Well, not exactly. In reality, there isn’t a set minimum score you need to get a car loan because your approval actually depends on a lot of factors. Additionally, many auto lenders want to give you a loan, even if you have bad credit. They just might give you a loan with steep lending conditions. Keep reading for a complete breakdown of how your credit score and other financial factors can impact your auto loan. 

How will my credit score affect my car loan?

In 2019, the average car loan APR (annual percentage rate) was 8.06 percent. However, borrowers with strong credit saw an average of 5.66 percent, and borrowers with poor credit maintained an average APR of 21.54 percent. Clearly, your credit score directly impacts the interest rate you’ll receive on your car loan.

Ultimately, your credit score affects whether you get approved and what loan terms you’ll receive. That’s because your credit score is a representation of your financial habits. A high credit score indicates that you’re a reliable person who pays back their debts on time.

In contrast, a low credit score shows that you have trouble paying back lenders. As a result, lenders give out higher interest rates to applicants with low credit scores so they can protect themselves. 

What credit score is considered good for a car loan?

You can often get a car loan with poor credit. However, the interest rate on that car loan may be extremely high. Typically, the best rates and easiest approvals go to individuals with a credit score of 750 or higher. 

If your credit score is below 650, it’s considered a “bad score,” and you can expect you’ll have to walk through the negative items on your report and explain them. 

Interest rates for new car auto loans

On average, you can expect to see the following interest rates for new cars:

  • Credit Score of 781–850 (Super Prime): 3.24%
  • Credit Score of 661–780 (Prime): 4.21%
  • Credit Score of 601–660 (Nonprime): 7.14%
  • Credit Score of 501–600 (Subprime): 11.33%
  • Credit Score of 300–500 (Deep Subprime): 13.97%

Interest rates for used car auto loans

These are the average interest rates for used cars:

  • Credit Score of 781–850 (Super Prime): 4.08%
  • Credit Score of 661–780 (Prime): 6.05%
  • Credit Score of 601–660 (Nonprime): 11.41%
  • Credit Score of 501–600 (Subprime): 17.78%
  • Credit Score of 300–500 (Deep Subprime): 20.67%

As you can see, the interest rates for someone with a deep subprime score can be four or five times as much as the rate for an individual with a super prime credit score. 

Let’s look at how this translates to savings over the life of a loan. 

Let’s say you’re purchasing a new $30,000 car with nothing down and a 60-month loan term. At a four percent interest rate, you’ll pay $3,150  in interest over the life of the loan. 

On the other hand, if you have poor credit and get an interest rate of 14 percent, you’ll pay $11,883 in interest. This means you’re paying almost half the vehicle’s price in interest! 

What can I do to help my car loan application?

There are a few different steps you can take that may boost your car loan application.

1. Be prepared with evidence of your finances

It’s best to come prepared to show where you stand financially. We recommend coming with proof of car insurance, employment and residence. Anything you can do to emphasize the good aspects of your financial profile will help. This approach is especially beneficial if you have a thin credit file or bad credit, because you’ll need to show the lender that they can trust you with an auto loan. 

2. Explain negative items on your credit report

Your credit score could be low due to negative items on your credit report. Take the time to walk through these items with your lender and explain each one. 

3. Work to build or improve your credit

Improving your credit can take time and will require patience, but it’s something you can act on right away. Start by:

  • Signing up for automatic payments wherever possible, so you never miss a payment
  • Paying off any outstanding debt that you can 

You need to know your credit situation before you start applying. This will give you an idea of where you stand and how far you have to go for a better credit score. Your lender will access your credit report when evaluating your application. You don’t want to be surprised by anything they find. 

Obtain your credit report to know what the lender will see and prepare your explanations. Additionally, accessing your credit report allows you to review it and ensure there are no inaccurate negative items.

Apply with a cosigner

If you have someone in your life who has good credit and is willing to cosign your auto loan, it can significantly help your chances of approval. A cosigner promises the lender that they will take on responsibility for the loan if you can’t make payments. 

Make a down payment 

Not having strong credit isn’t always a reflection of your financial situation. Some individuals have a thin credit file but make a respectable income and have a sizable savings. If you’re in the position to put down a down payment on the auto loan, it can greatly increase your chances of approval. A down payment means the lender has to lend you less money, which is less risky for them. 

Shop around

Just because one lender won’t work with you, it doesn’t mean another lender also won’t. Don’t give up, and keep looking for the best option for you. This also applies to interest rates. If the first lender approved you right away, it doesn’t mean you can’t find a better interest rate with someone else. 

Remember to be wary of hard inquiries, though. When lenders look into your credit history, they can pull a soft inquiry or a hard inquiry. A soft inquiry doesn’t impact your credit score. On the other hand, a hard inquiry typically lowers your credit score by a few points. If you have multiple hard inquiries over a period of time, it can significantly drop your score. 

Ask the dealership or lender to clarify if they’ll be pulling a hard or soft inquiry. If you’re shopping around, ask lenders only to pull soft inquiries and give you an approximate interest rate. When you’re ready to lock in one lender, they’ll pull a single hard inquiry and confirm your rate. 

How can a car loan affect my credit?

If you pay your loan on time and in full, a car loan can boost your credit. The positive payment history will be added to your report, and your score will benefit. 

Additionally, an auto loan adds credit diversity to your profile. This also helps to impact your credit score positively. 

On the other hand, as with all other types of loans, your auto loan will hurt your credit if you don’t make your payments.

Do your homework before you start looking for a car loan

Dealerships now make more money on the car loans they give out than the vehicle sales themselves. Interest rates for auto loans are on the rise, which is clearly reflected in the monthly payments consumers are signing up for. The average new-car loan payment in the United States was $531 in 2018. With such high costs, you want to make sure that you’re getting a financially sound loan that makes sense for your circumstances. 

Before you apply for a car loan, check your credit and know what’s working against you. Be prepared to supply relevant documents and understand what average rates you should be getting. Know that you have options, so you don’t have to (and shouldn’t) necessarily go with the first lender you find. 

Lastly, if you’re getting an auto loan with bad credit, use this opportunity to improve your situation. Do everything you can to repair your credit, including making on-time payments on the auto loan. After a while, you’ll see an improvement in your score and may even be able to apply to refinance your auto loan for a better interest rate. 

Photo of author

Author J Lipsky

Thank you for visiting

Leave a Comment

Business Finance

About Us

Business Finance News is a brand oriented to business owners and dedicated to analyzing and comparing the cost and conditions of B2B procurement of goods and services through free quotes delivered by business partners.


Address 5050 Quorum Drive, (75254) Dallas TX

telephone 844-368-6072


A personal loan is a medium term loan with a fixed interest rate that is repaid in equal monthly payments and it's usually limited to 24 months. Loan offers and eligibility depend on your individual credit profile. Our lenders can help you obtain as much as $3,000 depending on the lender, your state and your financial situation.

The owner and operator of is not a lender and is not involved into making credit decisions associated with lending or making loan offers. Instead, the website is designed only for a matching service, which enables the users contact with the lenders and third parties. The website does not charge any fees for its service, nor does it oblige any user to initiate contact with any of the lenders or third parties or accept any loan product or service offered by the lenders. All the data concerning personal loan products and the industry is presented on the website for information purposes only. does not endorse any particular lender, nor does it represent or is responsible for the actions or inactions of the lenders. does not collect, store or has access to the information regarding the fees and charges associated with the contacting lenders and/or any loan products. Online personal loans are not available in all the states. Not all the lenders in the network can provide the loans up to $3,000. cannot guarantee that the user of the website will be approved by any lender or for any loan product, will be matched with a lender, or if matched, will receive a personal loan offer on the terms requested in the online form. The lenders may need to perform credit check via one or more credit bureaus, including but not limited to major credit bureaus in order to determine credit reliability and the scopes of credit products to offer. The lenders in the network may need to perform additional verifications, including but not limited to social security number, driver license number, national ID or other identification documents. The terms and scopes of loan products vary from lender to lender and can depend on numerous factors, including but not limited to the state of residence and credit standing of the applicant, as well as the terms determined by each lender individually. 


APR (Annual Percentage Rate) is the loan rate calculated for the annual term. Since is not a lender and has no information regarding the terms and other details of personal loan products offered by lenders individually, cannot provide the exact APR charged for any loan product offered by the lenders. The APRs greatly vary from lender to lender, state to state and depend on numerous factors, including but not limited to the credit standing of an applicant. Additional charges associated with the loan offer, including but not limited to origination fees, late payment, non-payment charges and penalties, as well as non-financial actions, such as late payment reporting and debt collection actions, may be applied by the lenders. These financial and non-financial actions have nothing to do with, and has no information regaining whatsoever actions may be taken by the lenders. All the financial and non-financial charges and actions are to be disclosed in any particular loan agreement in a clear and transparent manner. The APR is calculated as the annual charge and is not a financial charge for a personal loan product. 

Late Payment Implications

It is highly recommended to contact the lender if late payment is expected or considered possible. In this case, late payment fees and charges may be implied. Federal and state regulations are determined for the cases of late payment and may vary from case to case. All the details concerning the procedures and costs associated with late payment are disclosed in loan agreement and should be reviewed prior to signing any related document. 

Non-payment Implications

Financial and non-financial penalties may be implied in cases of non-payment or missed payment. Fees and other financial charges for late payment are to be disclosed in loan agreement. Additional actions related to non-payment, such as renewals, may be implied upon given consent. The terms of renewal are to be disclosed in each loan agreement individually. Additional charges and fees associated with renewal may be applied. 

Debt collection practices and other related procedures may be performed. All the actions related to these practices are adjusted to Fair Debt Collection Practices Act regulations and other applicable federal and state laws in order to protect consumers from unfair lending and negative borrowing experience. The majority of lenders do not refer to outside collection agencies and attempt to collect the debt via in-house means. 

Non-payment and late payment may have negative impact on the borrowers’ credit standing and downgrade their credit scores, as the lenders may report delinquency to credit bureaus, including but not limited to Equifax, Transunion, and Experian. In this case the results of non-payment and late payment may be recorded and remain in credit reports for the determined amount of time.