Buying a car is an exciting experience. However, it can also be daunting, especially when thinking about the costs involved. One way to reduce the initial financial burden is to get a car loan with no down payment. But what credit score do you need to qualify for a zero down auto loan? Let’s find out.
Overview of Car Loans With No Down Payment
A down payment refers to the upfront payment made on a vehicle typically 10-20% of the car’s price. With a no down payment car loan the lender finances 100% of the vehicle cost including taxes, fees, etc.
The best part is that you don’t have to pay anything up front to drive the car home. On the other hand, interest rates and monthly payments for auto loans with no down payment are higher. Over the life of the loan, you’ll pay more in interest.
What is the Minimum Credit Score for No Down Payment Car Loans?
To get a zero-down car loan from most lenders, you need a credit score between 600 and 650. The higher your score, the better terms you can get.
Here’s a breakdown of the average interest rates based on credit scores
- Credit Score Above 720: 3-7%
- Credit Score 650-719: 7-13%
- Credit Score 600-649: 11-20%
- Credit Score Below 600: You may not qualify for zero down payment financing
As you can see, interest rates are much higher for borrowers with lower credit scores even if they qualify for no down payment car loans.
Tips to Get Approved for No Down Payment Auto Loans
If your credit score is below 650, getting approved can be challenging but not impossible. Here are some tips:
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To improve your credit score before applying, pay off your debts, make payments on time, and use less of your available credit.
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Co-sign with someone who has good credit. Having someone with good credit co-sign with you can help you qualify and get better rates.
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Make a larger down payment: Even 5-10% down can make approval easier and reduce interest rates.
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Choose an older used car: Opting for an older, low-cost used car reduces the loan amount, making approval more likely.
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Shop for lenders: Compare quotes from credit unions, banks, online lenders to find the best rates for your situation.
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Offer collateral: Pledging collateral like savings account funds or household assets may help offset credit risk.
Alternatives if You Can’t Get Approved
If your credit score is very low and you aren’t able to qualify for zero down payment financing, here are some other options:
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Save up for a down payment over time and then reapply.
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Consider buying an inexpensive used car that you can afford to pay in cash.
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Explore down payment assistance programs in your area if you qualify based on income.
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Look into rideshare services as an affordable temporary transportation solution.
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See if you have a family member willing to add you as an authorized user on their credit card to help build your score.
How to Prepare Your Finances Before Applying
To boost your chances of no down payment car loan approval:
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Check your credit reports and scores so you know where you stand.
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Pay down balances on credit cards and loans to lower your debt-to-income ratio.
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Calculate your budget to ensure you can afford the monthly payments.
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Gather documents like proof of income, residency, auto insurance quote.
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Get pre-qualified to check rates and know the loan amount you can get before shopping.
The Bottom Line
While possible with lower scores, a credit score of at least 650 is recommended to get approved for no money down car financing. Improving your creditworthiness, offering collateral, or bringing a co-signer can help offset credit risk. Weigh the costs carefully as interest rates are higher with zero down payment auto loans.
Bring a bigger down payment
A big down payment can help offset a bad credit score by lowering your monthly payments. It might even help you get a lower interest rate. For some lenders, a big down payment might make you appear less risky, despite a lower credit score.
What minimum credit score is needed to buy a car?
There isn’t one specific score that’s required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
Borrowers with scores of 501 to 600 account for more than 15.64% of cars financed, while people with scores of 500 or below account for 2.39%, according to Experian.
A lower credit score won’t necessarily keep you from securing a car loan, but it might spike your interest rate, leading to higher payments.
Buy Car With Bad Credit And No Money Down! (2025)
FAQ
What credit score is needed to buy a car?
There is no minimum credit score required to buy a car, but most lenders have minimum requirements for financing. To get a good rate on an auto loan, most people need a FICO score of at least 600.
Can I get a car with no down payment?
If your credit score is below perfect, you might be able to get a car loan with no down payment, but the interest rate will probably be higher. If you have a score below 580, you may not get approved for a card loan. You can improve your credit report in several ways, including by first checking its accuracy.
Can you buy a car with poor credit?
Despite these car loan statistics, buying a car with poor credit is possible, especially if you can provide a generous down payment (at least 20% on a new car, 10% for used). With that said, having a very good to an excellent score will increase your chances of approval and help you secure the most competitive rates and terms.
What is a good credit score for a car loan?
Usually, higher scores mean lower interest rates on loans. According to Experian, a target credit score of 661 or above should get you a new-car loan with an annual percentage rate of around 6. 70% or better, or a used-car loan around 9. 06% or lower. Superprime: 781-850. 5. 18%. 6. 82%. Prime: 661-780. 6. 70%. 9. 06%. Nonprime: 601-660. 9. 83%. 13. 74%.
Can you get a zero-down car loan if you have bad credit?
If you have bad credit, getting a family member or friend with good credit to co-sign your loan could help you get a car loan with no down payment. A co-signer agrees to take responsibility for your debt and payment if you fail to repay. If you default on payments, your credit score and your co-signer’s credit score can suffer.
How does a good credit score affect a car loan?
The higher your credit score, the less risk lenders think you pose. This means that you are more likely to receive more competitive auto loan rates and better terms. Better interest rates. In general, a good credit score, usually a score of 680 or above, can ensure a low interest rate. Lower monthly payments.
What credit score do I need to get a car with no money down?
Every lender sets its own requirements for zero-down-payment deals, if they offer them at all. Generally, the credit score needed to buy a car is at least 661 whether you make a down payment or not. You could still get a car loan if your score is lower than 661, but be prepared to pay higher interest rates.
What credit score is needed for no down payment?
If you’re hoping to purchase a home without a down payment, you’ll have to prove a specific income and have a credit score that’s at least in the mid-600 range.
Can I get a $20,000 car loan with a 600 credit score?
In general, you’ll need a FICO credit score of at least 661 to qualify for a traditional auto loan, although there are lenders that offer bad credit auto loans. Because interest rates remain high, securing a subprime auto loan may be more difficult — and while it is possible, expect to pay a premium.
What credit score do you need for a no down payment on a car?
- The applicant should be at least 21 years old.
- A CIBIL score of 800 or more is essential, with no record of negative loan repayments reflected in the credit report.