Can a Person With a Low Credit Score Buy a New Car?

Loan interest rates are often lower for new car purchases. (Reference 3)
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Stringent loan requirements make it harder to get a low interest rate on a new car loan, but that doesn't mean that you can't get a loan with a tarnished credit score. In fact, a low credit score is often viewed in a more positive light than no credit history at all, according to the National Consumer Law Center. The keys to buying a new car with low credit are to know your score, know what other people are paying and take time to shop around until you find favorable loan terms.

Get Your Credit Score

Don't wait for a car salesman or finance manager to tell you what your credit score is. Instead, find out for yourself through a service like or Knowing your credit score will allow you to see average interest rates for borrowers in your score range before you go shopping for a car or car loan. If your score is lower than expected, don't panic. There is no such thing as a cut-off score that will prevent you from getting financed.

Check Average Interest Rates

It's hard to determine whether you're being offered a fair interest rate if you aren't sure what other people are paying for their car loans. This is why it's a good idea to check average interest rates on new cars before you go shopping for a loan. You can see what others in your credit score range are paying by reviewing charts on sites like or reading quarterly reports from Experian Automotive, a company that regularly analyzes automotive data trends.

Compare Loan Offers

There are many places to get a new car loan. A local bank or credit union should be your first stop. Although these institutions tend to have stricter, more conservative loan policies, they often have competitive rates and may be more willing to overlook your low credit score and consider things like employment history or how long you've lived in your home. Other loan provider options include national banks, online lenders and even auto dealerships. In some cases, you may even be able to obtain auto financing from your employer or insurance company. Compare all of the finance offers you receive to see which lender is offering the lowest rates, a loan term you agree with and payments you can afford.

Crunch the Numbers

Although you may be able to get a new car loan with a low credit score, it's important to be confident in your ability to make your monthly payments on time before signing any paperwork. Use one of the many online car loan calculators available through sites like or to see how much your loan payments will be with a 36, 48 and 60-month loan. Compare the prices of new and used cars as well as the interest rates you might get on each type of loan. And keep in mind that high debt, late payments and missed payments will lower your credit score, while low debt and on-time payments will increase your score.

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