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Required Credit Score to Get a Car Loan

Car Loan Refinance
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Is there a required credit score to get a car loan? Many people ask this question, moreso than ever during times of economic hardship. When people are struggling to make ends meet, coming up with the cash to purchase a car outright is typically not possible… but cash shortages also contribute to lower credit scores, which makes getting a car loan an uncertain endeavor, too.

Do I Need a Certain Credit Score to Get a Car Loan?

It’d be convenient if there was a hard and fast rule about the score you need in order to get a loan to purchase a car. If the number was set in stone, you’d know exactly how much further you had to go, and you wouldn’t have to bother with the legwork of calling lenders and filling out applications only to find out you might not be approved for the loans. Unfortunately, in something as fluctuating and uncertain as the financial world, there’s no exact number that determines whether someone is eligible for such a loan.

Certainly a higher credit score vastly improves your chances of getting a loan, and the higher your score, the better the rate on that loan is likely to be. However, there are numerous other factors that contribute to lenders’ willingness to give you a loan, and some of those factors are out of your control entirely.

If, for example, you’re searching for a loan in a slow economic market, where not many people are out looking for loans, then lenders might be more willing to deal with you, even if you have a low credit score. The banks and credit unions need business as much as anyone else, and if nobody is seeking loans, they have to lower their lending standards, which often means being willing to lend to those with less-than-perfect credit. Of course, the terms of the loan, including the amount of interest you will have to pay over the duration, may not be ideal, and may even be incredibly steep. Still, if you need a loan and the only one you can get is a high-interest one, you may be willing to take it.

Keep in mind that in any market, and no matter what your credit score, there will likely be lenders willing to work with you. There are some lenders that specialize in bad-credit loans, and if you need the loan and have no other solution they can be lifesavers. Unfortunately, the often staggeringly-high interest rates and strict terms of the contracts can, more often than not, do more long-term damage to your credit as you struggle to keep up. You should weigh all of your options very carefully before agreeing to a car loan if you have poor credit. Of course, you always have the option of taking a car loan and then refinancing letter into a better deal once you have fixed your credit.

The higher your credit score is, the better your car loan is likely to be in terms of interest rates and long-term cost to you. You should do your best to raise your credit score to a mid-to-high number before going in search of a car loan. However, if you’re in a tight situation, with no other alternatives, it may be helpful to know that there is no required credit score to get a car loan – you must simply be prepared to pay more in the long run or may need to refinance once your score goes up.

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