Estimate Your Down Payment from Your Credit Score

This post explains how your credit score affects the pricing of your car. 1) we consider the down payment you will most likely be required to pay based on your credit score. 2) we consider the interest rate you will pay and what effect it has on your monthly payment.

Down Payment

Because almost everyone finances a new car, your credit score can limit the type of car you can get. With a large enough down payment, almost anyone can get financed for a new car. Below is a guide that will show you what kind of down payment is required to get financed for your dream car.

  • Below a 550 – you are going to have a hard time getting financed for a brand new car without a large down payment (20% or more).  However, there are websites that will help you finance a used car.  You may have luck financing a car with less of a down payment if you have a decent car payment history (you made your previous car payments on time). Most new car lenders will submit your applications to multiple lenders. It’s really difficult to say what they will eventually require. You’ll just have to go to the car dealership and see.
  • Credit score between 550 and 650 – you should not have a problem financing a new car if your recent credit history (last six months) is clean. A modest down payment may be required to show the lending institution you are serious about your car purchase. You will probably need to give the dealer a down payment of around 5% to 20% of the car purchase.
  • Between 650 and 700 – You will have no problem getting financed (assuming you have no delinquent marks in the past six months). You can most likely get a new car with a modest $500 down for almost any car.
  • People with credit scores above 700 will have no problem getting a new car, and may even qualify for 0% financing with little or nothing down. It really depends on the dealer and financing company they use. Not all dealers or financing companies offer 0% financing. Call around. The ball is in your court.

Interest Rate

Your credit score does not directly affect the final car price. However, the lower credit score you possess, the higher the interest rate (APR: Annual Percentage Rate) will be.  Below is a table giving you a ballpark figure the APR you can expect and what it means in monthly payment for a 36 month auto loan on $25,000 borrowed. You can also lower your monthly payment by extending the loan to 48, 60 or 72 months.

FICO scoreAPRMonthly Car Payment
720-8503.193%$729
690-7194.577%$745
660-6896.671%$768
620-65910.300%$810
590-61915.294%$870
500-58916.563%$886

Glossary

  • Invoice Price – the price the local dealer paid for a car.
  • Down Payment – the total amount of money required, usually in cash, at the closing of the vehicle sale.
  • Credit Score – Your FICO credit score is what most dealers will use to determine your credit worthiness.
  • APR – Annual Percentage Rate; is a rate that indicates the total cost of borrowing on a yearly basis. Higher number are worse.

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