650 Credit Score Auto Loan Interest Rate – What Can You Expect?

Having a score of 650 will give you decent terms, but not the best available. Find out how much you can expect to pay with a 650 credit score.

A 650 credit score auto loan interest rate 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 650 credit score is fair so it’s likely a borrower will be approved for a loan, the rates, however will be quite higher than if the credit score were 720 or above.

Below you’ll find information regarding auto loan interest rates for borrowers with a 650 credit score.

650 credit score auto loan interest rate

650 Credit Score Auto Loan Interest Rate

Here’s a table describing what rates (nationally) you can expect for a new car based on credit score.

Based on the average auto loan rates for a new car at a 60 month loan term and $25,000 principal loan amount, here’s what you’d pay if your score were either higher or lower:

  • If your score dipped to between 500 and 589 (bad/poor credit), you’d pay an additional $4,596.
  • If your score fell to between 590 and 619 (poor credit), you’d pay an extra $3,644.
  • If your score rose to between 660 and 689 (average/good credit), you’d save $2,163.
  • If your score increased to 690 – 719 (good credit), you’d save $3,800 on interest.
  • Finally, if you reached an exceptional credit score rating of 720 – 850 (very good/excellent credit), you’d save $4,720 on interest.

(All data comes from Informa Research Services, Inc. Updated May, 2019.)

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Is it better to buy used or new?

“Rising interest rates will be one of the biggest factors influencing how the auto market fares in 2019,” – Jeremy Acevedo, Edmunds’ manager of industry analysis

Typically, the interest on a used car loan for a 650 credit score will be relatively higher than for a new one.

This is usually because used vehicles are more likely to fail so lenders want to mitigate risk by imposing higher rates.

However, based on data from Informa Research Services, Inc.,the national interest rate for a 48 month loan on a used car for those with fair credit is 9.92%.

That’s considerably lower than the 11.255% for a new vehicle borrowers who fall into that same category have to pay for an identical loan term.

This is a good reason why it’s best to compare rates/prices between used and new vehicles periodically before making a purchase.

What credit score will auto lenders use? FICO® or VantageScore®?

The truth of the matter is, although your 650 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:

  • Repossessions,
  • 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.

How good is “fair” between both credit score systems?

Within the FICO® Score system, a rating of 650 would be considered to be on the higher end of “fair” (the range goes from 580 to 669), whereas on the VantageScore® 3.0 scale it would fall on the very low end of “fair” (the range here extends from 650 to 699).

As we can see from this, while both credit rating types give a denomination of “fair”, the FICO® Score considers it slightly better than the VantageScore®.
Why this matters?

Well, if using a credit score tracking service like Credit Sesame it’s a good idea to know which system they’re using. Credit Sesame, for example, uses TransUnion which employs the VantageScore® model.

650 credit score auto loan interest rate tips:

As mentioned previously, at 650, loan providers will tend to view you as somewhat risky. However, loans will still be approved at higher interest rates. 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.

Average loan amount/term for those with fair credit

According to data from Experian Information Solutions, the average credit score for those purchasing vehicles in 2018 was 714 for new cars and 661 for used.

The table below shows the average loan term and amount for those with a fair FICO®  score

(Data comes from State of the Automotive Finance Market Q3 2018,” Experian)

Potential online lenders for borrowers with a credit score of 650

These online lenders have low minimum credit score requirements thereby increasing approval rate for individuals with average credit:

[1] – MyAutoLoan.com

  • Minimum credit score: 500
  • APR range: 2.74% – 27%
  • Minimum Income: $1,800/month
  • Minimum loan amount: $8,000 to $100,000

[2] – CapitalOne

  • Minimum credit score: 500
  • APR: 3.795 (for excellent credit)
  • Minimum income: $1,500 – $1,800
  • Minimum loan amount: $4,000

[3] – Upstart.com

  • Minimum credit score: 620
  • APR range: 7.69% – 35.99%
  • Loan amounts: $1,000 – $50,000
  • Loan terms: 36 & 60 month terms

[4] – 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 650 credit score and lower your auto loan interest rate

As we can see from the data mentioned above, a 650 credit score auto loan interest rate will be approved. The main downside is the higher interest rate a borrower would have to pay.

If you were to hold off on purchasing a car until you’ve reached a higher 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 650, 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.

650 credit score 650 Credit Score Auto Loan Interest Rate 650 FICO score auto enhanced FICO score FICO auto industry option VantageScore 3.0
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