Is 650 a Good Credit Score for a Car Loan?

When it comes to buying a car your credit score plays an important role in determining the loan terms you’ll be offered. While creditors don’t see a 650 credit score as an excellent rating by any means they certainly don’t see it as horrible either. As a result, they’ll typically allow for a car loan with that rating based on the loan provider. 600 is, generally speaking, seen as the lowest score that a lender will loan to.

But is 650 considered a good credit score by auto lenders? Will you get approved for a car loan with a 650 credit score? What kind of interest rates can you expect? This article provides an in-depth look at what a 650 credit score means for your auto loan options.

What Does a 650 Credit Score Mean?

Before diving into how a 650 credit score affects your ability to get a car loan, it’s important to understand what that score represents.

There are a few different credit scoring models, with the FICO score and VantageScore being two of the most common. Both score ranges go from 300 to 850. So a 650 score falls right in the middle, considered fair credit on both scoring systems.

Here’s a quick breakdown of the different credit tiers according to FICO and VantageScore:

FICO Credit Score Ranges

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

VantageScore Credit Score Ranges

• 750-850: Excellent
• 700-749: Good
• 650-699: Fair
• 550-649: Poor
• 300-549: Very Poor

So a 650 credit score is viewed as fair by both scoring models. It’s not terrible, but not great either. You have some positive credit history, but also likely have late payments or other negative marks bringing down your score.

Can You Get Approved for a Car Loan with a 650 Credit Score?

The good news is that 650 is generally high enough to get approved for an auto loan these days. According to Experian data, over 15% of auto loans went to borrowers with credit scores between 601-660. So lenders are clearly approving applicants with 650 credit scores.

However, it’s important to understand that there is no specific minimum credit score requirement to buy a car. Every lender has their own standards when it comes to creditworthiness.

For example, some buy-here-pay-here dealerships may approve borrowers with scores as low as 500. Meanwhile, luxury automakers’ financing arms often require 700+ scores for lease or financing approval.

So a 650 credit score doesn’t automatically qualify or disqualify you. Lenders look at your entire financial profile, including your income, existing debts, down payment amount, etc.

But with a 650 score, you should have a decent shot at getting approved as long as the rest of your financials are in decent shape. Just be prepared for higher than average interest rates.

What Interest Rate Can You Get with a 650 Credit Score?

While a 650 credit score is fair, it’s still considered subprime by most lenders’ standards. So expect to pay higher interest rates than borrowers with good or excellent credit.

Here are some average used auto loan rates currently being offered to borrowers based on credit score, according to Bankrate:

• 850-740: 3.113%
• 739-670: 4.162%
• 669-650: 7.356%
• 649-590: 11.664%
• 589-500: 17.457%

For borrowers with excellent credit in the 800s and 700s, average rates are below 5%. But for 650 credit score borrowers, average used car loan rates jump up over 7% on a 5-year loan.

However, that doesn’t mean a 7% rate is the best you can get. Rates vary between lenders. Do some shopping around to see if you can beat the average. Get pre-qualified with several lenders, including banks, credit unions, and your own auto insurance provider.

While you’ll likely pay a higher interest rate than those with excellent credit, 650 is still a decent score and should allow you to secure reasonable auto financing. Just be sure to shop around for the best rate possible.

What’s the Typical Car Loan Amount with a 650 Credit Score?

In addition to affecting your interest rate, your credit score can also impact the size of the loan you qualify for. Lenders generally offer smaller loan amounts to higher risk borrowers.

According to data from Experian, here were the average new and used car loan amounts by credit tier:

• Super Prime (781-850): $32,187 new, $25,495 used
• Prime (661-780): $31,289 new, $21,817 used
• Non-Prime (601-660): $27,021 new, $17,163 used
• Subprime (501-600): $22,186 new, $13,563 used

So with a 650 credit score, you can expect to get approved for more than subprime borrowers but less than prime borrowers. The average used car loan amount for non-prime borrowers was around $17,000.

Of course, the loan amount also depends on factors like your income, existing debts and expenses. But credit history clearly impacts lending limits. With a 650 score, you may not qualify for as large of a loan as you hoped.

If your budget requires financing over $20,000 but you’re only approved for $15,000, adjusting your budget to opt for a less expensive vehicle may be necessary.

Tips for Getting a Car Loan with a 650 Credit Score

While a 650 credit score makes auto loan approval very possible, follow these tips to strengthen your case even more:

• Save for a larger down payment: Putting down 20% or more shows the lender you’re financially committed. It also lowers the amount financed.

• Reduce debt: Pay down credit cards and other debts to lower your DTI ratio before applying.

• Check for errors on your credit reports: Incorrect negative information can unfairly lower your scores. Dispute any errors.

• Add a co-signer: Asking a family member with excellent credit to co-sign reduces the lender’s risk.

• Shop around: Compare rates from multiple lenders to find the best deal. Get pre-qualified before going to the dealer.

• Improve your credit: Pay all bills on time, lower balances, and resolve collection issues. A 670+ score unlocks better rates.

With a few credit-boosting strategies, a 650 score can potentially improve to a 670 or 700+ score within several months to a year. Holding off on your car purchase briefly to boost your score could end up saving you thousands on your auto loan’s interest charges.

The Bottom Line

While excellent credit in the 700s or higher can secure the very best auto financing terms, a credit score of 650 is still considered fair. You should be able to get approved for an auto loan with around 650 credit score. Just don’t expect ultra-low interest rates.

Do plenty of shopping around among both direct lenders and dealerships. With some negotiation, you may be able to get an interest rate under 7% on a used car loan with 650 credit. Improving your score and making a large down payment can also help offset the higher rates that come with fair credit auto loans.

A 650 credit score is considered “fair” and generally falls within the range where you can potentially get approved for a car loan, though it may not be at the best interest rates or terms.

A 650 credit score is generally considered a “fair” credit score, and while it may not be ideal, it still allows for some financial opportunities.