Your credit score is a huge factor that WILL be considered when you try to get an auto loan. In most situations, you will be able to get a loan with a score in this range but it will impact the amount of interest you pay in a huge way.
Situations Where Getting An Auto Loan Will Be Tough
- If you have had a repo in the last two years.
- If you have a bankruptcy in the last two years.
With a score around 650, you can expect to pay 4.5% HIGHER interest than you would pay if you had a score of 720. Right now with 650 credit you can get an auto loan at 8.35% interest (accurate 8/15/12). People with a 720 FICO score can get rates that are under 4%. That will of course change as interest rates change. Needless to say, you will be paying a LOT extra if you take out a loan with your current credit situation.
For example purposes, let’s assume that you are going to buy a $30,000 car with a term of 5 years. At 3.75% interest, your payment will be $549.12 and you’ll pay a total of $32,947.20. At 8.35% interest, your payment will be $613.33 and you’ll pay a total of $36,799.80. It costs you an extra $4k at that rate.
In other words, getting an auto loan with a credit score of 650 is a terrible idea! If I was considering getting a loan for a car and my credit was in that range, I would wait long enough to get my score up to at least 680.
If you take a look at my article on getting a mortgage, you’ll see a lesson on improving your 650 FICO score. I would use that and after you do, you’ll get a lot better interest rate on your car loan.