Since you were six years old, you have desired to own a cherry-red convertible car. You’ve finally located the ideal model, and you even went for a test drive to experience the wind in your hair. You’re worried that your 600 credit score will be the only thing preventing you from hitting the open road.
You might be able to get an auto loan with a 600 credit score, but there are other factors lenders will consider to determine your eligibility for a loan. So will a score like that be a stop sign or just a speedbump? Before you apply for an auto loan, follow these steps to increase your chances of getting approved for the vehicle of your dreams.
Credit Score 600? Here’s How To Get An Auto Loan
Even though your credit score is 600, this one figure shouldn’t cause you to be negatively impacted. For whatever reason, you still require a dependable and secure car to get from point A to point B even if your score dropped to 600. If you don’t have the money, you will require an auto loan.
It’s critical to understand how the application process for your auto loan will differ from that of someone with a higher score. Even with a 600 credit score, you can still be eligible for an auto loan, though your options may be limited.
Lender Considerations When Applying for an Auto Loan
There are two important things to think about when you apply for an auto loan. The first is your income, which tells lenders how much you can afford to pay each month; the second is your credit score, which shows how likely it is that you will pay back your loans.
A credit score of 600 notifies lenders that you have trouble paying back loans, so they are less willing to give you money.
The interest rate you qualify for on your auto loan is one way this will affect it. Interest rates can range from 3. 5% for individuals with exceptional credit to over 2015% for those with inferior credit scores
The Interest Rate Difference
The part of the loan that is charged to you that is also referred to as the annual percentage rate is your interest rate. Interest rates are highly variable, and the main predictor of the kind of rate you’ll receive is your credit score.
Here’s an illustration of how a low interest rate and a high interest rate impact your loan.
Low-Interest Rate Loan
Car Price: $25,000
Interest Rate: 4.69%
Loan Term: 60 months
Monthly Payment: $468
Total Car Cost: $28,094
High-Interest Rate Loan
Car Price: $25,000
Interest Rate: 16.78%
Loan Term: 60 months
Monthly Payment: $618
Total Car Cost: $37,102
The interest rate is the only difference between these two loans’ terms when you compare them. The low-interest loan rate is 4. 69%, and the high-interest loan rate is 16. 78%.
You will pay $150 more each month and $9,008 more during the course of your 60-month loan due to the higher interest rate. It is important to understand how your interest rate affects the financing of your auto loan, even though there isn’t much you can do about these higher rates until your credit improves.
You must give your lender some proof of your ability to repay the loan, regardless of your credit score—600 or 800.
This includes:
- evidence of employment in the form of a pay stub; typically, in order to be eligible for an auto loan, you must earn at least $1,500 per month.
- Tax returns if you are self-employed
- Driver’s license
- Proof of residency in the form of a utility bill
Make A Down Payment
Even though there are some loans available with no down payment for people with good credit, you will probably need to make a down payment when you buy a car.
Making a down payment gives your lender some cash up front in case you don’t follow through with payments, as they will be wary of your ability to repay based on your credit score. Your down payment requirement can vary greatly.
Having a friend, spouse, or other loved one co-sign your loan can help you get better terms and improve your chances of being approved for one. It is important to discuss all the details with your co-signer before they agree because they will be held legally and financially accountable for your loan.
Credit Union Auto Loans For 600 Credit Score
A credit union is a non-profit financial organization that distributes its savings to its members, like you. Additionally, because they are smaller than the majority of traditional banks, they are able to assess your particular circumstances individually.
Applying for an auto loan with a credit union makes sense because they are known to offer lower rates than banks, and you now understand how important it is to get the best interest rate.
At Listerhill Credit Union, we understand how crucial it is to locate a loan that satisfies your requirements and your financial situation without facing consequences for a lower credit score. Let us assist you if you’re trying to find an auto loan with a credit score of 600. Applying is free, and we offer flexible payback options and some offers with no down payment.
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FAQ
Is 600 a good credit score to buy a car?
Is a score of 600 good for credit? This puts you in the “Fair” category, which is one level above the “Poor” category. When planning your budget for your next car, keep in mind that lower credit scores usually translate into less favorable rates and terms.
How much of a loan can you get with a 600 credit score?
A 600 credit score usually gets you a loan between $1,000 and $50,000, though the exact amount will depend on the lender. Remember that interest rates increase with the amount you borrow. Make sure you only take out loans that you can afford to pay back.
What is the lowest credit score for a car loan?
The majority of borrowers who apply for used auto loans have credit scores at least 675. Most borrowers with new auto loans have scores of about 730. A new car may require a minimum credit score of about 600, but excellent credit frequently results in lower rates and monthly payments.
What is the average interest rate on a car loan with a 600 credit score?
Credit scoreAverage APR, new carAverage APR, used carPrime: 661-780. 6. 88%. 9. 33%. Nonprime: 601-660. 9. 29%. 13. 53%. Subprime: 501-600. 11. 86%. 18. 39%. Deep subprime: 300-500. 14. 17%. 21. 18%.
Read More :
https://listerhill.com/blog/2019/6/getting-auto-loan-with-600-credit-score
https://www.experian.com/blogs/ask-experian/can-i-get-a-car-loan-with-a-600-credit-score/