What is a good credit score to buy a car with no down payment

Your credit score is an important factor when locking down financing. 700 is a good credit score to buy a car because it proves you are a responsible borrower with a credit history in the prime range. Even if your score is under 700 there are still ways to obtain affordable financing, especially at Green Light Auto Credit! Let’s evaluate how good a 700 credit score is and what you should know before buying your next vehicle.

How Good is a 700 Credit Score?

Credit scores can be anywhere from 300-850, with five qualifying bands ranging from “poor” to “excellent”. The higher your score, the more likely you are to secure better rates and loan terms, but you don’t have to have perfect credit to buy a car. In fact, most people don’t!

Lenders will consider your credit score when determining rates. According to Experian, here is a snapshot of what type of loan and rate you can expect based on your history:

• 781-850: Superprime loan at 3.65% (new) or 4.29% (used)
• 661-780: Prime loan at 4.68% (new) or 6.04% (used)
• 601-660: Nonprime loan at 7.65% (new) or 11.26% (used)
• 501-600: Subprime loan at 11.92% (new) or 17.74% (used)
• 300-500: Deep subprime loan at 14.39% (new) or 20.45% (used)

As you can see, a 700 credit score puts you in the “good” or “prime” category for financing, making 700 a good credit score to buy a car. While it’s always a good idea to get your credit score in its best possible shape before buying a car, if you’re already around the 700 range you will be good to go.

Can I Buy a Car With a 700 Credit Score?

In 2020, Experian reported that the average credit score to secure a used-car loan was 657, with 721 being the average for new-car loans. You can buy a car with a 700 credit score, but even if you are under 700, there are still ways to get financing.

Those with bad credit will need to supply additional proof of their financial history, including pay stubs, proof of residence, or other supporting documents that illustrate your ability to pay bills on time. You may also consider putting down a larger down payment or getting a cosigner or guarantor on your loan to improve your rate.

Buy a Car With a 700 Credit Score at Green Light Auto Credit!

At Green Light Auto Credit, our finance experts want to help you get into a good car that fits your needs and budget, and we’ll work with you to find financing that works. Contact us to get started today.

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You desperately need to buy a car, but you lack the cash or the required down payment. No problem, says the auto dealer: You can finance the whole purchase—at interest rates that range as high as 12% to 22%. Unless you like the idea of paying such exorbitant terms, consider these ways to buy an auto with no money down.

Key Takeaways

• If you need to totally finance your car purchase, Increasing your credit score can qualify you for better loan terms.
• Getting a co-signer might also let you buy a car with a down payment.
• Be sure to shop around at dealers and lenders; the more you know about car loan rates and terms, the better a deal you can negotiate.
• Even a small down payment is better than none—so delay a car purchase, if possible, until you can come up with some cash.

Boost Your Credit Score

Lenders lower interest rates for borrowers who have steady jobs or regular monthly income, who have lived in one place for at least a year and who have a credit record that shows they can meet their payments.

Credit scores of 680 and higher give you the best chances of persuading a lender to waive your down payment without raising interest rates. Scores between 580 and 669 are considered subprime; the lender may waive the down payment, but will certainly ding you with a higher interest rate on the entire car loan. A score that is 580 and below may cause the lender to reject you altogether.

Your first step is to straighten out your credit report by checking its accuracy. Then, take steps to boost your credit score. Pay all bills on time, and try to pay off debts and credit card balances—or at least keep them low, around 25%–30% of your total credit limit. As having a good credit score is crucial for securing an ideal loan, you may want to consider one of the best credit monitoring services to ensure your information stays safe.

Consider a Cosigner

Another option is to get a family member or friend with a strong credit score to cosign the purchase contract with you. It might get you out of the down payment, though it only helps you lower your interest somewhat, since lenders realize that the car is usually for the person with the weaker score and typically offers an annual percentage rate (APR) that hovers around the median range.

Getting a cosigner is not to be done lightly. The person shares the responsibility of the loan with you: If you miss a payment, or are habitually late, you lower your credit score and that of the cosigner, too. It can also be fraught with emotion—although a cosigner technically has no ownership in the vehicle, they could feel they've a right to it. If you do get a cosigner, share the title; be diligent in your repayments, and keep organized records to prevent disagreement.

Shop Around

Car loans can vary a lot. So do your homework, and shop around. Consider auto dealerships, local credit unions, banks, or alternative loan providers. Research current auto loan rates online, and look for specialized online lenders that offer low-rate auto loans without down payment requirements.

Before asking around, familiarize yourself with the most common auto loan rates to avoid being duped or misled by dealers. They're a competitive bunch, by nature, and if you show you know what the going rates are and what others offer (implying you'll take your business elsewhere), it's amazing how the person you're dealing with suddenly will "see what we can do for you."

Save Up for a Down Payment

Yes, we know the title of this article is How to Get a Car With No Down Payment. But we'd be remiss if we didn't say: You really do a lot better if you can come up with some cash. The problem with not making a down payment is that it can leave you in an upside-down situation should you want to sell the car down the road. Cars depreciate fast. You could end up seriously out of pocket, even owing a lot of money, if the outstanding balance on the loan is more than the car's resale value.

And the bite might not be as bad as you think. While 20% down has been the traditional amount, dealers have lately gotten more flexible in the minimum cash amounts they require. In fact, car buyers in 2019 made an average 11.7% in down payments, due to the increasing costs of vehicles. Of course, the more in cash, the better. But any amount of down payment is recommended because it lowers the amount you owe in principal and interest, and avoids the "underwater" scenario above.

9%–12%

The range of required down payments for a new or used auto, according to the Kelley Blue Book.

If you can, wait several months before you buy your car so that you can save up for the down payment. Along with saving, use that time to boost your credit score, so that you'll qualify for more favorable loan terms.

The Bottom Line

It is possible to buy a car with no down payment, but you run a higher risk of being tagged with steeper interest rates. You can always buy a cheaper used vehicle or trade in your existing car, if you have one that's in good condition, since such steps usually lower your rate, too. In all cases, look for short-term loans that are less than 72 to 84 months long, and avoid extras, such as extended warranties or credit life insurance, which may raise your overall payments.

To better understand what purchasing a car with no down payment might look like, it's worth experimenting with an auto loan calculator to ensure that the other factors are still favorable.

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