What Car Loan Can You Get With a 650 Credit Score?

A credit score is a numerical representation of how well you handle credit, awarded by the three credit bureaus (Experian, TransUnion, and Equifax). Credit scores consist of your payment history, any amounts owed, your current credit history length, any new credit accounts you create, and your credit mix. Your amounts owed and payment history comprise the most significant portions of calculating your credit score. 

The average credit score consists of several elements that factor into its calculation, including: 

• Debt-to-income ratio
• Payment history
• Number and type of loans
• Available credit
• New credit 

The question of credit often comes up when discussing APR on a car loan. The annual percentage rate (APR) represents the interest you pay on the loan based on your creditworthiness. Borrowers with higher scores unlock lower rates, while those with lower rates pose a greater risk and receive higher rates instead. 

A 650 credit score falls into the “fair” FICO and VantageScore categories. The charts below demonstrate the various ranges for each type of credit score: 

Most auto lenders rely on your FICO credit score to determine your creditworthiness for an auto loan. However, they may also look at your VantageScore and which category you fall into, as demonstrated below: 

Many financing deals advertised on television incorporate a low APR based on a near-perfect credit score. 

If your credit score is above 620, you are likely to get a car loan with favorable terms. Most loans you can get with a 650 credit score require a down payment and come with terms of 48 months or longer. You can expect average interest rates because 650 is a middle-of-the-road credit score. Admittedly, the terms may not be as good as you get with a score over 700, but they hardly include the higher interest rates for bad credit scores.

Current interest rates for borrowers with a 650 credit score sit at about 13% for a used car and 9% for a new car, per the table below: 

If you financed a new car for $40,000 with the 9% interest rate you’d be eligible for with your 650 credit score, you’d pay $3,600 in interest fees. The same car at just 10 points higher would only cost you $2,400 in interest payments over the life of the loan. Used cars work off a similar system, with a $40,000 used car costing you $5,200 in interest with a 650 credit score and $3,200 with a score 10 points higher. 

You can often refinance your credit score after initiating the loan agreement to take advantage of lower interest rates or a higher credit score. If you move the needle past 650 to increase your credit score, consider refinancing for the following reasons: 

• You’ve lowered your debt 
• Your income has increased
• You want to see if better rates exist
• You want to extend your loan terms for an even lower monthly payment

However, you should also weigh the drawbacks of refinancing as listed below: 

• You’re close to paying off your car loan 
• You don’t want to keep your car for much longer
• The fees outweigh any savings you’d receive
• You want to apply for credit soon

Ultimately, it’s up to the calculations to determine which route works best financially. Crunch the numbers and carefully consider whether refinancing will help or hurt your cause. 

You can lease a car with a 650 credit score, but the terms may not be ideal for the situation, especially since you won’t own a car after the lease ends. Most of the best car leasing deals from dealerships require a 700 or above credit score to qualify for a lease. With your credit score at 650, you risk paying too much to lease a car that could be put into savings to buy a car instead. 

Though you may not fulfill leasing eligibility requirements, a 650 credit score earns you the right to a FINN car subscription. FINN offers monthly subscription fees that include insurance, depreciation, maintenance, and registration, so you can easily budget car-related expenses. FINN’s wide fleet selection also puts you behind the wheel of several of the latest makes and models you’ve been itching to drive. 

While the following tips for building your credit score may not necessarily help you pay off a car loan faster, they can put you in a better financial position the next time you’re up for a credit check. Here’s how you can build your credit up to qualify for a lower interest rate and pay less for your next car: 

• Continue to pay your bills on time: On-time payments demonstrate a positive payment history, a key ingredient in any lending relationship. 
• Increase your credit limit: Higher credit limits mean a lower debt-to-income ratio that works in your favor. Ask your credit card company for a credit limit increase to see what they can offer you. 
• Extend your credit: If you can become an authorized user on a relative’s credit card, provided they’re financially responsible, your credit score can benefit. Positive payments, available credit, and credit utilization can boost your score. 
• Inquire about rent reporting: Reporting your rent can also demonstrate a positive payment history, even though it’s not necessarily an influential factor for most lenders. At the same time, reporting your rent can also help you flesh out your credit report. 
• Pay off any collection amounts: Besides high-interest debt, collection amounts should take priority when paying off debt to restore your peace of mind and remove the threat of being sued. 
• Review your credit report: Challenge any inaccuracies and monitor your credit by requesting a free annual credit report from Experian, Equifax, and TransUnion.

Increasing a credit score by 100 points is easier to accomplish with a lower credit score than a higher one. However, you shouldn’t let the progress of only a few points here or there slow you down. When it comes to finances, slow and steady often wins the race.