Getting a Car Loan With 520 Credit Score

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Summary:  A review of the best car loan rates for new, used & refinanced vehicles for borrowers with credit scores between 520 and 529.

Your credit score will play a big factor if you are looking to get the best rates for an auto loan. A credit score of around 520 to 529 is considered subprime. Getting a good deal on a car loan is going to be difficult. That doesn't mean it's impossible!

Your credit isn't the only factor affecting your interest rate. You'll have to decide whether to finance through the car dealer, your local bank or credit union, or an online lender. Your down payment and the term of your loan also make a difference.

Let's take a close look at auto loan rates for borrowers with credit scores between 520 and 529.

Disclaimer: "Credit score" refers to the FICO score in this article.  If you have a different score (i.e. VantageScore), that does not likely equal your FICO. You can get your FICO score here.

Current Auto Loan Interest Rates
(September 2021)

Auto Loan Rates by Credit Score

Average rates for Q2 April-June 2021

Actual interest rates are based on many factors such as state, down payment, income, and others. Source: Experian: State of the Automotive Finance Market Q2 2021

Auto Loan Rates by Type of Financing

Lowest found rates | Accessed on 02/09/2021

* Source: MyAutoLoan.com
Interest rates (APR) shown are the lowest rates participating lenders have recently offered. Your actual interest rate (APR) may be higher based on your unique, individual credit situation.

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Auto Loan Rates for a New Car With 520 to 529 Credit Score

The average interest rate for a new car loan with a credit score of 520 to 529 is 11.03%.

Most dealerships will advertise plenty of incentives for buying a new vehicle, such as cash rebates, low interest rates, or special lease offers. Buying a new car will generally come with much better interest rates than buying a used vehicle.

With a credit score of 520 to 529, those offers probably won't be available to you.

☝️ Remember that the rates cited are averages. You may get different offers from different lenders. Make sure you shop around for the best rates instead of going with the option that has the best advertising.

Average Auto Loan Terms for a New Car

Here's what you can realistically expect to get based on national averages.

Finding the Best New Car Auto Loan Rates for Subprime Credit

Even though your options might be limited you can still get an auto loan with a subprime credit score of 520 to 529. There are many lenders that specialize in new car loans for people with bad credit.

💡 The easiest way to get offers from multiple lenders is to use an auto loan matching service. These services can usually get you multiple offers in a matter of minutes.

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Over 1000 dealerships nationwide.
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Auto Loan Rates for a Used Car With 520 to 529 Credit Score

A lot of people wonder what a good interest rate is on a used car.

We see incredible offers online and on TV for new car loan rates, but we rarely see used auto rates advertised. In general, borrowers will pay a higher interest rate for a used car loan.

With a credit score of 520-529, you should qualify for a subprime APR rate, which will be higher than someone with a 700 or 800 credit score.

The average rate for a used car loan in the 520 to 529 credit score range is 17.11% (6.8% higher than the average rate for a new car).

Rates are higher for used cars because their value is lower. If the lender has to repossess your car it may be difficult for them to sell it for enough to cover your balance. That means more risk to the lender. Lenders charge higher rates when their risk rises.

Even with higher interest rates, used cars can be a good deal, simply because the sticker price is often much lower than the price of a used car.

⚠️ Be Careful!
Buying a used car has its risks. That's why you want to always check the vehicle's history. You can run a vehicle history report on sites like Carfax using the Vehicle Identification Number (VIN). If the dealer or seller will not give you the VIN, consider this a major red flag and move on to another vehicle.

Average Auto Loan Terms for a Used Car

Here's the rate you can expect to get based on national averages.

You can see the impact of the higher rates. The difference, of course, is that the average sale price of a new car in the US is $39,960, while the average price of a used car is $22,000. That's a big difference!

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Auto Refinance Rates With 520 to 529 Credit Score

You can qualify to refinance with a 520 to 529 credit score!

If you had a lower credit score when you took out your car loan or if you financed your car through a dealer and didn't get a great deal, you could save money by refinancing.

⚠️ Do not apply for a refinance car loan if your credit score is lower than it was when you got your original loan.

Refinancing may be able to lower your monthly payment and put that extra saved interest right into your pocket.

If you refinance with a longer-term loan you could lower your monthly payment considerably. You will pay more in interest and you may end up owing more than your car is worth.

Average Auto Refinance Rates

Refinance rates are usually the same as rates for a loan taken at the time of sale, so the figures quoted above will apply.

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How Your Credit Score Affects the Cost of an Auto Loan

Auto loans are secured: your vehicle serves as collateral for the loan. If you default, the lender can repossess the car. That makes your loan less risky than an unsecured loan would be, so interest rates are lower than they are for most unsecured loans.

Your credit score has a huge impact on the interest rate you're offered and on the cost of your loan. In the table below you can see the average interest rates for both new and used cars by credit score to see just how much of an effect it has.

Average auto loan rates by credit score (Q2 2021)

Category	Score Range	New car average interest rate	Used car average interest rate
Deep subprime	300-500	14.59%	20.58%
Subprime	501-600	11.03%	17.11%
Near prime	601-660	6.61%	10.49%
Prime	661-780	3.48%	5.49%
Super prime	781-850	2.34%	3.66%

Actual interest rates are based on many factors such as state, down payment, income, and others. Source: Experian: State of the Automotive Finance Market Q2 2021

How Your Credit Score Affects the Monthly Payment

Here's an example to illustrate the difference your credit score makes in determining your monthly payment.

👉 Example:

Let's assume you're taking out a new car loan with the following terms:

Car cost: $30,000
Down payment: $3000
Loan term: 48 months

Credit Score	Interest Rate	Monthly Payment	Total Interest Paid
300-500	14.59%	$745.83	$8,799.84
501-600	11.03%	$698.22	$6,514.56
601-660	6.61%	$641.67	$3,800.16
661-780	3.48%	$603.37	$1,961.76
781-850	2.34%	$589.78	$1,309.44

As you can see, your credit score has a huge impact on the interest rate you're offered and on the cost of your loan. With a score of 520 to 529, you are near the bottom of the range and can expect very high interest rates.

If your score is between 520 and 529, you might consider trying to bump that score up by at least 80 points before applying for a car loan. That 80-point gain could save you almost $60 per month; over $2,700 over the life of the loan!

How Your Loan Term Affects the Cost of an Auto Loan

For many people, the size of their monthly payment is the key to affordability. The loan term has a larger impact on monthly payments than small differences in your credit score.

Let's look at how loan terms affect monthly payments for different credit scores in our target range. Let's use the same example from above to compare the effect of the loan term vs a small credit score change on your car loan.

👉 Example:

Same as before, our car loan has the following terms:

Car cost: $30,000
Down payment: $3000
Interest rate: 11.03%
Credit score: 520-529

Credit Score	3 Year (36 months)		5 Year (60 months)		7 Year (84 months)
	Monthly Payment	Total Interest	Monthly Payment	Total Interest	Monthly Payment	Total Interest
520	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
521	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
522	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
523	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
524	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
525	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
526	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
527	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
528	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32
529	$884.33	$4,835.88	$587.45	$8,247.00	$462.73	$11,869.32

👉 Long-term car loans provide a lower monthly payment, but they have real disadvantages. You will pay significantly more total interest and you may owe more than your car is worth for much of your loan term. Look into the issues around long-term car loans before you decide!

Try It Yourself

Use our auto loan calculator below to see just how much your credit score and loan term can affect your monthly payment and the total amount of interest you end up paying for your loan.

➗ Go to the full page to view and use the calculator.

4 Non-Credit Factors that Affect Your Monthly Payment

Multiple factors play a role in determining a good auto rate for new, used, and refinance loans.

Whatever your credit score, these four non-credit score-related factors will affect your monthly car or truck payment.

1. Income & Debt-to-Income Ratio

Lenders will want to make sure that you have enough money to pay your vehicle loan each month. To determine this, they look at how much money you earn and spend each month.

They use the word "debt" instead of "expenses" and call the combination of the two your debt-to-income ratio.

Most lenders like to see your debt-to-income (DTI) below 40%, including your new monthly auto payment. Lower is better, and a low DTI may help you get a better rate on your loan

3 Steps To Calculate Debt-To-Income Ratio

1. Add up all of your monthly bills including rent, car payments, student loans, utilities, etc.
2. Divide your total monthly bills by your total monthly income
3. The resulting number is your debt-to-income ratio

👉 For example:
If I have $5,000 in monthly income and $2,000 in monthly expenses and I divided the monthly expenses 2k by monthly income 5k, I would have a 40% DTI.

➗ You can use our debt-to-income ratio calculator to find your DTI.

2. Employment

Lenders want to lend money to people with steady incomes.

The most common way borrowers show that they have a consistent income is by the length of time they have been employed at one location.

People who jump from job to job regularly are not considered to have a steady income.

3. Down Payment

When you purchase a new or used car or truck you are going to have to make a down payment. Lenders may give you a better interest rate if can make a large down payment.

It doesn't matter whether you have a 775 credit score or a 527.

Lenders want to make sure that you have some skin in the game and generally prefer to see you make a 20% down payment on the purchase of a new car. Some lenders will lend with no down payment, but you may need a high credit score. You may also find that the terms of the loan are not desirable.

Used vehicles don't depreciate their value as fast as a new automobile and because of this, lenders usually only ask consumers to make a 10% down payment on a used car.

If you have a trade-in you can apply the value of your previous vehicle to the down payment.

Lenders do not typically ask for a down payment on a refinance loan.

Who has the Best Auto Loan Rates? Credit Unions, Banks, or Online Lenders?

Trying to figure out who has the best auto loan rates can feel like an impossible task.

It is natural to want to use your local Credit Union or Bank because you feel loyalty to the financial institution that you trust with your monthly banking needs.

In some instances, going directly through your Credit Union or Bank can be your best bet. Your bank or credit union knows your finances and may consider information other than your credit score when they make an offer.

However, local Credit Unions and Banks may be limited in the loan programs they can offer. They may not be able to compete with the lowest online auto loan rates.

You also have to consider the time it takes to go to your local financial institution to obtain a quote for an auto loan. Online lenders may give you a quote in seconds.

⚠️ Be Careful!
Be careful if you get an auto loan from a Credit Union or Bank that you have a checking, savings, or CD account with. Some financial institutions require you to sign a document allowing them to take payment without your permission if you do not pay.

In comparison, you can obtain four loan offers within two minutes of filling out a short, one-page application with Auto Credit Express.

Even if you decide to see what your Bank or Credit Union has to offer, getting an online lender quote is free and takes next to no time.

Purchasing a car can be a stressful endeavor because of all the decisions you must make with that 'helpful' high-pressure car salesman stuck to your hip.

A great way to help alleviate some of that pressure and stress is by getting pre-approved for an auto loan long before you walk onto the car dealership lot.

Many people do not realize that they do not have to use the dealership's financing options. Dealer financing is often the most expensive option.

In fact, according to U.S. News:

"Having the entire car-buying process neatly bundled into one transaction…makes purchasing easy. However, it's a horrible way to buy a car if you want to get a good deal. It's a common dealer trick to keep you focused solely on the monthly payment while they manipulate the trade-in value, vehicle price, and car loan terms. In most cases, they make a significant portion of their profit on the sale by marking up the cost of the car loans you are offered."

The one thing you should always do to get the best rate is to apply with more than one lender. Borrowers who shop around consistently get better rates than borrowers who take the first deal they are offered. Getting pre-approved by several lenders gives you confidence that you are getting the best deal you can.

Be sure to keep your applications within a 15-day window. The credit bureaus will recognize that you are shopping and record only a single hard inquiry. Multiple hard inquiries can harm your credit!

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Ways to Reduce Your Auto Loan Interest Rate

With a credit score between 520 and 529, you are going to qualify for subprime loans at a much higher interest rate than if you were able to increase your credit score to 700+.

Because you are so close to receiving prime credit score rates it may make sense to consider spending 30, 60, or 90 days building your credit.

The time and money spent would put you in a lower risk bracket and open the doors to much more financial freedom and better opportunities.

Another option to get a vehicle loan with a lower interest rate would be to ask a family member to co-sign on the loan.

The co-signer would become the primary borrower and you would be the secondary borrower.

They would be responsible for making the payments on the loan if you failed to do so, but you would qualify for an auto loan based on their credit score and not yours.

If you know someone with a good credit score, it may not hurt to ask them to be your co-signer.  Be sure that both you and your co-signer understand the responsibilities of each party.

🔎 Additional Auto Loan Resources

Disclaimers: Annual Percentage Rates (APR), loan term, and monthly payments are estimated based on analysis of information provided by you, data provided by lenders, and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers' credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term, and credit history. All loans are subject to credit review and approval.

Getting a Car Loan With 520 Credit Score

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