Your credit score plays a significant role in determining the car loan interest rate you'll be offered, whether you're purchasing a new or used vehicle. Understanding how your credit score affects car loans can help you make more informed decisions and potentially save money.

What is a Credit Score?

Your credit score is a numerical representation of your creditworthiness. It is based on your credit history, including how well you’ve managed past loans, credit cards, and other debts. The score typically ranges from 300 to 850, with higher scores indicating better creditworthiness.

How Credit Scores Affect Car Loan Interest Rates

Lenders use your credit score to assess the risk of lending you money. The better your credit score, the lower the risk for the lender. As a result, those with higher credit scores are often offered lower car loan interest rates, while those with lower scores may face higher interest rates.