Car Loans FAQ

What is an acceptable credit score for auto financing? Every lender decides this for themselves so there is no completely straight forward answer on this, however we can make estimations about what is generally considered acceptable. For instance, anything over 700 is considered excellent and will be offered the best interest rates, often anything over 680 will be offered the best rates. Anything under 500 is always considered bad and will be hard to find someone who will accept them, but really anything under 600 puts you in a very difficult situation. There are a number of other factors that are considered with your application, however, like if you're currently in debt, what your income is, how long you've been employed, what your recent credit history has been, if you have a down payment or a cosigner.

Should I get a cosigner to improve my situation? Well, that's a difficult question to answer. Will it help you, yes. Is it good for the person cosigning? Well, it's risky. See, when they cosign the car loan they become responsible if you fail to make a payment. So if one month something comes up, like you need new tires or have an emergency medical bill, and you find yourself unable to make your monthly payment, then it becomes their responsibility. If they can't pay it either then it goes on their credit history, too, lowering their score. So while it will definitely help you get a better rate and a better chance of acceptance if you're in a situation, it is risky for the other person.

How do I get a good interest rate? There are a number of things you can do to secure the best interest rate on your auto loan. First off, shop around for the best offers. Then make sure that your situation is the best it can be. Clean up your credit history where possible because your score is based on your history (you can do this by paying down some of your credit cards, reduce any debt that you can, and clean up any mistakes that may be on there). If you offer up a down payment this will help show that you're serious and also drop your rates, as will finding a cosigner with a great rating and steady employment. A mix of these factors will help you get the best rates you can.