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A fourth-quarter 2025 report by credit bureau Experian found that roughly 69% of cars financed were for borrowers with credit scores of 661 or higher.
The report also found that on average, the credit score for a used-car loan was 689, while the average score for a new-car loan was 753.
If you’re in the market for a car, it’s worth checking your score — and shopping around.
“A strong credit score can help you secure a better loan and interest rate, but the money you save may not be enough to offset the high price of cars today,” says NerdWallet’s auto loans expert, Shannon Bradley. “Average new car prices have remained around $50,000 for quite some time, with used cars at about $25,000.”
“A strong credit score can help you secure a better loan and interest rate, but the money you save may not be enough to offset the high price of cars today,” says NerdWallet’s auto loans expert, Shannon Bradley. “Average new car prices have remained around $50,000 for quite some time, with used cars at about $25,000.”
A majority of car buyers have a 661 score or higher
There isn’t one specific score that’s required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
Borrowers with scores of 501 to 600 account for 13.32% of cars financed, while people with scores of 500 or below account for 1.99%, according to Experian.
A lower credit score won’t necessarily keep you from securing a car loan, but it might raise your interest rate, leading to higher payments.
“Regardless of your credit score, it’s always smart to think of how you can get a car you like for the best price and be able to finance less,” Bradley says.
Patience and flexibility about make and model are key, she says.
“Consider lower trims or last year’s model. Compare similar models from different manufacturers, since some are being affected by tariffs more than others. For new cars, check the automaker’s website for incentives.”
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Auto loan interest rates
Interest rates differ based on your credit score. Knowing what to expect can help you budget for your car. Usually, higher credit scores mean lower interest rates on loans.
According to Experian, a target credit score of 661 or above should get you a new-car loan with an annual percentage rate of around 6.27% or better, or a used-car loan around 9.98% or lower.
| Credit score | Average APR, new car | Average APR, used car |
|---|---|---|
| Superprime: 781-850 | 4.66% | 7.70% |
| Prime: 661-780 | 6.27% | 9.98% |
| Nonprime: 601-660 | 9.57% | 14.49% |
| Subprime: 501-600 | 13.17% | 19.42% |
| Deep subprime: 300-500 | 16.01% | 21.85% |
| Source: Experian Information Solutions, 4th quarter 2025. Based on VantageScore credit scoring model. | ||
Using a car loan calculator illustrates the difference that can make.
For example, a higher credit score can save you thousands in interest. On a $20,000, five-year used-car loan, a borrower with score in the 700s might pay about $5,500 in interest — compared with roughly $11,400 for someone with a score in the 500s. That's more than double the cost.
Plus, in most states, bad credit can mean higher car insurance rates, too. California, Hawaii and Massachusetts don't allow insurers to use credit when determining car insurance rates.
What is a good FICO Auto Score?
Your FICO Auto Score is a specialty score ranging from 250 to 900. Just like with traditional credit scores, higher scores get better terms.
To calculate this score, FICO weighs past car-loan payments more heavily than the traditional score does. It also gives more weight to any repossessions or auto-loan bankruptcies you might have filed.
To check your automotive score, you can buy a full set of FICO scores through myFICO.com.
How to buy a car with bad credit
If you are worried about getting approved, figure out what you can bring to the negotiating table.
Bring a bigger down payment
A big down payment can help offset a bad credit score by lowering your monthly payments. It might even help you get a lower interest rate. For some lenders, a big down payment might make you appear less risky, despite a lower credit score.
Bring documents showing financial stability
If your credit score is low, lenders may look at other signs to show your reliability. Bring documents like recent pay stubs and proof of address to show you have steady income and are making consistent housing payments.
Consider bringing your own financing
Dealerships offer financing, but it's smart to check with a bank or credit union, too. You can also compare car loan rates online. Once you choose a lender, getting preapproved can make the process smoother.
Each application can cause a “hard pull” on your credit, so try to submit them close together when rate shopping. Why? Because the credit bureaus will typically group multiple inquiries together and count them as one.
If you get a higher rate than you wanted, keep building your credit. After six to 12 months of on-time payments, you may be able to refinance your auto loan for a lower rate.
If you still aren’t getting car loan rates that work for you, it might be time to delay your car purchase and work on building your credit.
Does buying a car help your credit?
Yes — if you manage the loan well. Here’s how:
- Payment history: An auto loan gives you another chance to show you pay bills on time. Payment history is the most important factor in your credit score.
- Credit mix: A car loan is an installment loan, with fixed monthly payments due over a set period of time. Adding this type of loan can help your score if you mostly have revolving credit, like credit cards. Lenders like to see a mix of both.
» Ready to get started? Get a free credit score from NerdWallet today.
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- 1. Experian Information Solutions. State of the Automotive Finance Market Q4 2025. Accessed Apr 24, 2026.
