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Can I Get a Car Loan with a 580 Credit Score?

It is possible to get a car loan with a credit score of 580, and we can help. Typically, you will need to meet a few guidelines that a lender will have in place. Lenders look at your credit score after looking at other factors that they feel are more important. Those additional factors may include, but are not always limited to:  loan to value ratio (LTV), total debt to income (DTI) ratio, length of loan, vehicle age, vehicle mileage, down payment offered, length of employment, gross income (before taxes) per month. If you want to see if you’ll be approved, simply apply online. Typically, you’ll find out if you’re approved in less than an hour.

What Auto Lenders Want to See

Most lenders want to see that the LTV is less than 115 percent, the vehicle has less than 100,000 miles, and is no more than seven years old. Additionally, lenders like to see that you are offering 20 percent of the purchase price as a down payment when your credit score is 580. The down payment needed drops as your credit score rises. Many institutions want to see that you have at least $1,450 in gross income monthly and that your DTI is less than 40 percent. The lower your credit score, the lower the desired DTI, so with 580 you may need a DTI of 30-35 percent. Last, but not least, the majority of lenders want to see that you have at least two years on the job or within the same field of work–sometimes only one year. If you meet these standards–or are at least close–you have a great chance of getting approved.

Basing Your Auto Finance Rate on the Right Score

Once that is all settled, a lender will look at your credit score. The score looked at for an auto loan is not the same as the traditional score that you can buy from a credit reporting agency. The one most commonly used is from FICO and is called your auto-enhanced score. It is usually higher than your other credit scores unless you have abused previous auto loans. Late payments and/or repossessions will lower this score more than they will your traditional score.  Don’t tell your dealer your credit score at first.  Instead, you should act like you don’t know it.  Let the dealer finance person pull your scores, and see what they are.  If they quote you a higher score than 580, don’t say anything.  If they quote you a lower rate, pull out the paperwork from your last credit inquiry.  Remember, rates are negotiable at this stage, and you can request a rate quote here.

One last factor to consider is that a credit score of 580 will force you to pay a higher interest rate. With a score in that neighborhood, you may face an interest rate of at least 10 percent, but most likely as high as 18.99 percent APR.

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