Do you want to know the credit score needed for an auto loan without a cosigner?
A cosigner takes full responsibility for paying back an auto loan. You must meet higher standards without a cosigner.
A good credit score for a stand-alone auto loan is 660 or higher, but lenders also look at other factors.
For instance, they also consider down payment size, debt-to-income (DTI) ratio and employment stability. The minimum credit score could be higher or lower than 660 based on these other factors. See where you stand.
Score By Down Payment
Your down payment size affects the credit score needed for an auto loan without a cosigner. A small deposit means more risk for the lender, while a large one means less risk. Two extremes illustrate this concept.
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0% Down
You need a higher credit score than 660 to get car financing without a down payment. Default risks are higher when borrowers have no equity in the vehicle.
Zero-down car loans are hard to get because the monthly payments are higher and less affordable. Also, borrowers may default if they owe more than the car is worth. Autos depreciate quickly.
100% Down
You can buy a new car with a worst-possible credit score of 350 if you pay the full price in cash. The dealer gives you the title, and you drive away as the owner.
You do not need a cosigner because you are not borrowing money. No lenders are involved in the transaction. You don’t need to meet any credit criteria when you pay in cash.
Score By Debt-To-Income Ratio
Your debt-to-income (DTI) ratio affects the minimum credit score needed to get an auto loan without a cosigner. A low DTI means you can afford the monthly repayments, while a high DTI suggests the opposite.
Lenders calculate DTI by dividing your monthly debts by your gross earnings. This calculation often includes:
- Housing costs (rent or mortgage)
- Long-term installment obligations
- Minimum payment on revolving accounts
- Mandatory alimony and child support
A good debt-to-income (DTI) ratio for a car loan is typically below 36%.
High DTI
You might need a higher credit score than 660 if your DTI exceeds 36%. Lenders worry you can’t afford the monthly payments and will fall behind.
You can get a car loan with a high DTI by keeping the purchase price low. Choose an affordable used vehicle instead of an expensive luxury or sporty model.
Low DTI
A credit score slightly below 660 is satisfactory if your DTI is under the 36% standard. Auto lenders see you can afford the payments comfortably.
People with a low DTI don’t live check-to-check and can save money, making them less likely to default.
Low DTI borrowers have emergency money for car repairs and are less likely to fall behind on payments when the brake pads wear out or tires need replacing.
Score by Employment History
Your job history affects the minimum credit score needed for an auto loan without a cosigner. Your income must continue uninterrupted for up to six years to repay the loan.
Self-Employment
You might need a higher credit score than 660 if you are self-employed. About 35% of self-employed people are unprofitable, which worries lenders.
Car loans for independent contractors and other self-employed individuals require proof of income over an extended period. Expect to provide tax returns and bank statements showing regular deposits.
The better your income documentation, the lower the credit score requirement.
Job-Employment
A credit score below 660 might be sufficient if you have a long work history with one employer. Lenders love job stability because it suggests your income will continue without interruption.
Banks might call your employer to verify income and employment.
- Borrowers working at larger employers, like the federal government, have excellent job security. Lenders might lower their score requirements.
- Borrowers working for small businesses have less job security. Lenders might raise score requirements.
