: In most states, bad credit also leads to higher car insurance rates. Strategies for Buying with Lower Credit
If your score is below 660, experts from NerdWallet and Consumer Reports suggest these steps to improve your odds: How Your Credit Score Affects a Car Purchase
: A 100-point difference can change your monthly payment by $50 to $150 on a $25,000 loan. do you need good credit to buy a car
: Lower scores often result in shorter loan durations (e.g., capped at 48–60 months) to reduce lender exposure.
In 2026, most lenders categorize borrowers into five tiers. Those in the "Prime" range (661+) hold roughly 70% of all car loans. Credit Rating Score Range Avg. New Car APR Avg. Used Car APR ~4.7% – 5.3% ~6.8% – 7.2% Prime ~6.4% – 6.8% ~9.4% – 9.9% Nonprime ~9.0% – 11.0% ~12.0% – 14.0% Subprime ~12.0% – 14.0% ~16.0% – 19.0% Deep Subprime : In most states, bad credit also leads
Data based on reports from Experian and WalletHub for Q4 2025/2026.
While you do not strictly need "good" credit to buy a car, having it significantly reduces the cost and complexity of the purchase. You can secure an auto loan with nearly any credit score, but your score determines your interest rate (APR), required down payment, and overall loan terms. In 2026, most lenders categorize borrowers into five tiers
: A borrower with a score in the 500s might pay over $11,400 in interest on a $20,000, five-year loan—more than double the $5,500 paid by someone with a score in the 700s.
