Quick Answer
Yes, it is possible to buy a car from a dealership with a credit score of 600, but it will be challenging. A credit score of 600 is considered poor, and most lenders will see applicants with this score as high-risk. However, some dealerships specialize in financing automobiles for buyers with poor credit. The interest rates and terms likely won’t be ideal, but with a large down payment, some options may exist. The process will require patience and diligence as the buyer works to secure financing.
What Credit Score is Needed to Buy a Car?
Most experts recommend a minimum credit score of 660 to buy a car. This score is considered fair, and buyers with a 660 FICO score or higher will qualify for average interest rates from lenders.
Here are some general credit score guidelines for auto loans:
| Credit Score | Credit Rating | Interest Rates |
|---|---|---|
| 800-850 | Excellent | 3-7% |
| 740-799 | Very Good | 4-8% |
| 670-739 | Good | 6-13% |
| 580-669 | Fair | 11-16% |
| 500-579 | Poor | 15-20% |
| 300-499 | Very Poor | 22%+ |
As the table shows, a credit score of 600 would fall into the poor range, likely leading to interest rates of 15-20% or higher from a standard lender. While not impossible to get approved, many buyers will struggle to find reasonable financing at this level.
Getting Approved with a 600 Credit Score
The best options for getting approved for an auto loan with a 600 credit score include:
Apply for financing before visiting the dealership
By having financing already secured, buyers have more leverage when negotiating with the dealer. Options include banks, credit unions, and online lenders that specialize in approvals for poor credit. Coming prepared with financing shows the dealership you are serious.
Consider a co-signer
Adding a co-signer with good credit can improve the chances of getting approved and lower the interest rate. The co-signer becomes equally responsible for repaying the auto loan, so this option requires a trusted individual.
Make a large down payment
A down payment of 20% or more of the vehicle’s value signals to the lender you are financially committed. The larger the down payment, the lower the risk for the lender. Making a sizable down payment upfront can help offset a poor credit score.
Look at used vehicles
Opting for a used vehicle instead of a new one reduces the loan amount borrowed. Since the overall cost is lower, getting approved becomes easier. Used cars also tend to have lower interest rates.
Consider a subprime lender
Specialized subprime lenders work specifically with applicants who have poor credit. They are accustomed to higher-risk borrowers and may offer more reasonable terms than a standard lender. Subprime loans do carry higher interest rates but can be an option.
Improve your credit first
Taking some time to improve your credit score before applying for an auto loan can expand your financing options. Paying down balances, disputing errors on your credit report, or establishing new positive credit history helps raise your score.
What Interest Rate Can I Expect with 600 Credit?
With a 600 credit score, expect interest rates between 15-20% at minimum, even from subprime lenders. Some buyers may see rates exceeding 20%. Here are some factors that determine the interest rate:
– Credit score – The lower the score, the higher the rate. A 600 score signals high risk.
– Down payment amount – A larger down payment reduces the amount financed, lowering risk.
– Loan term – Shorter loan terms have lower rates. Lenders prefer loans to be paid off sooner.
– Vehicle – New cars and luxury models often have higher rates than used, non-luxury vehicles.
– Lender – Subprime lenders that specialize in poor credit carry more risk, so they charge higher rates.
– Credit history – Factors like bankruptcies or collections can negatively impact rates.
While it’s impossible to pinpoint an exact rate without applying, buyers with 600 credit should temper expectations and prepare for interest rates between 15-20% in most cases. Shopping around with multiple lenders and comparing options is recommended.
How Much Money Down Do I Need with Poor Credit?
With a 600 credit score, expect to put down a sizable down payment of at least 10-20% of the vehicle’s value. Some lenders may require as much as 30%.
Here are some benefits of making a large down payment with poor credit:
– Shows financial commitment and willingness to repay
– Lowers the amount financed, reducing risk for lender
– Allows for loan approval with weaker credit
– Helps qualify for lower interest rates
– Provides equity upfront to protect against depreciation
– Reduces gap between loan balance and car value
While putting down 20% or more can be challenging, it greatly improves the chances of buying a car with poor credit. If 20% is not feasible, aim for at least 10% or the most you can manage. Coming up with as much money down as possible gives buyers the best shot.
Can Dealerships Work with a 600 Credit Score?
Most franchised dealerships use standard lenders that won’t approve loans for applicants with credit scores below 620 or 640. However, some dealerships do work specifically with poor credit buyers.
Here are some tips for finding a dealership to work with a 600 credit score:
– Search for “bad credit car dealerships” in your area. Many specialize in financing poor credit customers.
– Consider smaller independent used car lots over larger franchised dealers.
– Ask dealers ahead if they finance customers with credit scores below 600 or 620.
– Look for “buy here, pay here” dealers that finance vehicles in-house for credit-challenged buyers.
– Expand your search radius if needed. Be prepared to travel further to find a dealership that will work with you.
– If financing is pre-arranged, more dealerships may be willing to accept it for the sale versus handling financing themselves.
While dealerships that accept extremely low credit scores can be hard to find, they are out there. Doing plenty of research, using special financing, and being flexible all help when shopping with a 600 credit score.
What Extra Fees Can I Expect with Poor Credit?
When buying a car with poor credit, expect to pay extra fees above and beyond the purchase price. Lenders protect themselves from default risk by charging borrowers with lower credit additional fees. Here are some to look out for:
– Origination fee – This one-time charge covers processing costs for the loan. Usually 1% of the total loan amount.
– Documentation fee – Cost for preparing loan contracts and paperwork. Typically $300-$400.
– Service contract – Extended auto warranty plans bundled into the loan, adding $1,000-$2,000.
– GAP insurance – Covers difference between loan balance and insurance payout if car is totaled. Usually $300-$500.
– Credit insurance – Optional insurance protecting loan balance if borrower becomes ill, loses job, etc. Adds over $1,000.
– Interest charges – With high rates, a significant amount goes toward interest, especially over longer terms.
– Prepayment penalties – Charges for paying off loan early, sometimes several hundred dollars.
With lower credit, extra fees quickly pile up. It’s important to budget for these expenses when financing a car. Don’t be afraid to push back on unnecessary add-ons.
How Can I Get the Best Deal with Poor Credit?
Here are some tips for getting the best deal possible when buying a car with poor credit:
– Get pre-approved for financing – This gives you bargaining power at the dealership so you aren’t stuck with their expensive financing offers.
– Bring proof of income and down payment – Verifying this upfront speeds up the process and shows the dealer you can afford the vehicle.
– Know your budget – Stick to monthly payments you know you can handle and avoid getting pressured into something unaffordable.
– Bring someone with good credit – They can serve as a co-signer or help spot any dealer tricks.
– Negotiate the price – Bad credit means you’ll pay higher interest rates, but don’t overpay for the car itself.
– Inspect the car thoroughly – Have a mechanic ensure it’s in good shape before agreeing to a purchase.
– Avoid extras like extended warranties – Don’t add more costs since bad credit loans already carry higher fees.
– Read all paperwork carefully – Make sure the deal matches what you agreed upon verbally.
– Shop around – Compare options at multiple dealerships. More inquiries won’t hurt your credit further.
Taking these steps helps ensure buyers with lower credit don’t get taken advantage of. Know your budget, secure financing, negotiate firmly on price, and scrutinize all paperwork.
What Type of Car is Easiest to Buy with Poor Credit?
When looking for a car with poor credit, simpler and more affordable is better. Here are some types of cars that are easier to purchase for credit-challenged buyers:
– Used car – New cars depreciate rapidly so used models 2-5 years old are best values. Interest rates are lower too.
– Basic trim model – Avoid costly trucks or SUVs and stick to basic sedans or economy cars to keep loan amounts manageable.
– Under $15,000 – Keep the purchase price low to reduce amount financed. Older used cars tend to be priced under $15k.
– Fuel efficient – Good gas mileage equals lower operating costs. Look for smaller cars with 4-cylinder engines.
– Reliable brand – Research reliable makes/models since repairs can be challenging with bad credit. Toyota, Honda recommended.
– Private party – Save money buying from an individual instead of a dealer that may inflate pricing. Have a mechanic inspect first.
A simple and affordable used car bought private party for under $15,000 cash is ideal for bad credit buyers. Focus on reliability over flash to avoid headaches down the road.
Can I Get a Car Loan with a 500 Credit Score?
Getting approved for an auto loan with a credit score of 500 or below is extremely challenging and unlikely from a standard lender. Here is what to expect with a score this low:
– Few lenders will consider applicants. Even subprime lenders hesitate at 500.
– Down payment requirements jump to 30% or higher.
– Interest rates exceed 20% for most borrowers, sometimes up to 30%.
– Loan maximums top out around $10,000 – $15,000.
– Loan terms are shorter at 3 years or less.
– Much higher chances of denial.
While not totally impossible, a credit score at 500 makes buying a car very difficult. Even high-risk lenders consider borrowers with scores in this range too unreliable. Improving credit or saving up to buy an inexpensive used car for cash may be the only realistic options until your score increases.
Should I Buy a Car with Bad Credit?
Here are some pros and cons of buying a car with bad credit to consider:
Pros:
– Have reliable transportation to work or school
– Rebuild credit by making payments on time
– Take advantage of special bad credit financing
– Get the specific car you need for your situation
– Widen future financing options by developing positive history
Cons:
– Very high interest rates and fees
– Higher chances of repossession if payments can’t be made
– Prevents focusing funds on credit repair and savings
– Loan balances may exceed car values (upside down)
– Limited financing options if repairs are needed
Having poor credit certainly makes buying a car more difficult and expensive. While transportation may be necessary, it’s important to consider all factors and budget carefully before purchasing. Building savings, working on credit repair, and buying an affordable used car for cash are often better alternatives.
What Steps Can I Take to Improve My Credit Score Quickly?
Improving a poor credit score takes diligence and patience, but here are some steps to build credit more quickly:
– Pay down credit card balances – Keep cards below 30% of limit
– Dispute any errors on your credit reports
– Become an authorized user on someone else’s credit card
– Take out a credit builder loan and repay on-time
– Limit new credit inquiries by only applying for needed accounts
– Maintain low credit utilization by spacing out charges
– Enroll in free credit monitoring to stay on top of your score
– Avoid missed payments which hurt scores dramatically
With a concerted effort, credit scores can increase substantially in 6-12 months. Obtaining your free annual credit reports and contacting bureaus directly about inaccuracies can also bump up your score more quickly. Steady on-time payments are essential.
Conclusion
Buying a car with a 600 credit score is challenging but possible with the right preparation and expectations. Seeking out specialized bad credit financing, coming up with a large down payment, considering a co-signer, and selecting an affordable used vehicle provide the best chances for getting approved. However, the process requires patience as options will be limited, rates unfavorable, and many extra fees involved. Sometimes waiting to improve credit or saving up to buy an inexpensive car for cash make better financial sense than taking on an expensive high-risk auto loan that strains the budget. For buyers who need transportation immediately, being informed at every step, standing firm during negotiations, and carefully evaluating all options helps when financing a car with poor credit.
