An auto loan interest rate with a 628 credit score can vary based on the lender you choose, down payment and even debt-to-income ratio.
Also, loan terms (either 36, 48 or 60 month loans) can affect your rate as well. The longer your term is, the higher your rate will be.
A 628 credit score is fair so it’s likely a borrower will be approved for a loan, the rates, however will be a tad higher than if the credit score of 660 or above.
Below you’ll find information regarding auto loan interest rates for borrowers with a 628 credit score.
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Auto loan interest rate with a 628 credit score
What kind of car loan can I get with a 628 credit score?
So when it comes to what kind of car loan you can get with a 628 credit score, view the table below. It describes what rates (nationally) you can expect for a new car based on credit score.
(All data comes from Informa Research Services, Inc. Updated May, 2019.)
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Is it better to buy used or new?
When buying a car, you have many options available. Depending on what your interests are and your financial situation, buying used or new can have it’s benefits and drawbacks. View the pros and cons here:
Pros for New:
- Warranty: These usually cover your vehicle for unexpected repair costs. They can have limits based on years and miles. For instance, Kia has a basic warranty that’ll last 5 years/60,000 miles (whichever comes first).
- Latest safety features: Safety is a huge concern for many families so ensuring your vehicle has up-to-date equipment is a great reason to purchase new.
- Interest rates: Because the car is new, interest rates will be lower than if you financed a used vehicle. Used cars can have unknown mechanical issues and therefore imposes a risk to lenders.
Cons for new
- Depreciation: A new vehicle can depreciate 20 percent after 12 months of use; and as high as 40% after 3 years. After 3 years of owning, a $30,000 car will be worth only $12,000 if you decide to sell it.
- Insurance costs: Auto lenders will require your purchase full insurance on your care which will increase your monthly expense.
- Recalls: Manufactures are known to make mistakes and have faulty components that can cause safety issues (e.g. Takata airbad recall). Used vehicles that’ve been out for awhile are typically up-to-date on all recalls.
Pros for Used
- Still Good: Cars nowadays can last over 100,000 miles thanks to improved technology and engineering.
- Less expensive: One obvious positive of buying used is the lower price tag. You’ll experience less depreciation and have better opportunity to purchase the vehicle in full if the price is low enough
- No sales tax: You may be exempt from paying sales tax if you purchase a used car out of state. Check with the DMV to learn more about the laws in your state.
Cons for used
- Lemon risk: Of course, it’s possible the vehicle you purchase will break-down soon after driving it off the. You may need a professional mechanic to take a look at the vehicle before buying.
- Limited choice: With a new vehicle you can select trim levels with extra features. You don’t have as many options when buying used.
- Repair costs: It may not be a lemon, yet, because of it being later in its life-cycle, you may have more repair costs that aren’t covered by any warranty.
What credit score will auto lenders use? FICO® or VantageScore®?
The truth of the matter is, although your 628 FICO® score is important in predicting your creditworthiness, there’s an industry-specific FICO score that caters to auto financing.
The FICO® auto industry option, or auto enhanced FICO® score, is based on your past auto financing history.
It ranges from 300 to 900 (unlike FICO®’s classic, or BEACON, 300 to 850 range) and it weighs factors like:
- On-time car loan payments,
- Whether a car loan or lease was included in a bankruptcy, and
- Whether your loan or lease account was sent to collections.
If you’re buying your first car, your classic FICO® score will be pulled. However, if you’ve owned a car in the past, your auto enhanced FICO® score will likely be used to determine your interest.
Where is “fair credit” between both credit score systems?
Within the FICO® Score system, a rating of 628 would be considered right in the middle of “fair” credit (the range goes from 580 to 669), whereas on the VantageScore® 3.0 scale it would fall into the “poor” category (the range here extends from 550 to 649).
As we can see from this, FICO® gives give a denomination of “fair”, while the VantageScore® scales categorizes a 628 credit score as being poor.
Why this matters?
Well, if using a credit score tracking service like Credit Sesame it’s a good idea to know which system their using. Credit Sesame, for example, uses TransUnion which employs the VantageScore® model.
Auto loan interest rate with a 628 credit score tips:
As mentioned previously, at 628, loan providers will view you as a fair borrower. Your 628 credit score auto loan interest rates will be high, perhaps even double digits, however, improvement is possible. Below are a few ways to save money on interest payments:
- Make a larger down payment: Making a larger down payment will decrease how much is paid in interest overtime. Typically, a 20% down payment is ideal for a new car and 10% is acceptable for a used vehicle. Of course, you’ll borrow less if you exceed those amounts.
- Pay every two weeks as opposed to monthly: You’ll increase the annual payments you make on your auto loan to 13 as opposed to 12. Just pay half the monthly balance every two weeks (26 payments; 26 ÷ 2 = 13) vs monthly.
- Ask to pay extra on the principal of the loan: If you can pay extra each month, you’ll save more money. For instance, if you make an extra $50 payment on a $20,000 loan with 10% interest rate (from $424.94 to 474.94), you’d save $761.
- It’s worth exploring and comparing offers: The fastest way to compare auto lending offers is by searching online databases. You’ll be able to easily explore and compare rates before purchasing a vehicle.
Potential online lenders for borrowers with a credit score of 628
These online lenders have low minimum credit score requirements thereby increasing approval rate for individuals with average credit:
 – MyAutoLoan.com
- Minimum credit score: 500
- APR range: 2.74% – 27%
- Minimum Income: $1,800/month
- Minimum loan amount: $8,000 to $100,000
 – CapitalOne
- Minimum credit score: 500
- APR: 3.795 (for excellent credit)
- Minimum income: $1,500 – $1,800
- Minimum loan amount: $4,000
 – Upstart.com
- Minimum credit score: 620
- APR range: 7.69% – 35.99%
- Loan amounts: $1,000 – $50,000
- Loan terms: 36 & 60 month terms
 – LendingClub
- Minimum credit score: 600
- APR range: 6.95% – 35.85%
- Loan amounts: up to $40,000
- Loan terms: 2, 3 or 5 years
Increase your 628 credit score and lower your auto loan interest rate
As we can see from the data mentioned above, a 628 credit score auto loan interest rate will be approved. The main downside is that you could potentially save more money with a higher score.
If you were to hold off on purchasing a car until you’ve reached a good, or even exceptional credit rating, then you could potentially save hundreds of dollars off future loan payments.
Conversely, if a vehicle is needed relatively soon, making on-time monthly payments will eventually increase your score which opens up the possibility to a favorably refinancing situation.
Hard Inquiries affecting credit score
Of course, there are many options for auto loans with a credit score of 628, it’ll just take a bit of research.
Just be aware that dealerships will send your information to multiple lenders in hopes of finding decent financing terms.
Typically, inquiries will remain on your credit report for two years. They’re categorized as hard inquiries (vs soft inquiries) and usually negatively affect your credit score.
However, credit scoring systems understand that when shopping for a car, multiple inquiries will be made.
For this reason, FICO® counts hard pulls made within 45 days for auto and home loans as one, VantageScore® has a shorter time-frame at only 14 days.