Buying a new car isn’t cheap, so most people look to finance. This is even the case for many of the best used cars. Of course, practically everyone wants the best car loans. However, many drivers wonder about the credit score they may need to get approved. Generally, a person is safe with a 700 credit score, but there are also many car financing options for people with bad credit. 

What credit score do you need to finance a new car?

When discussing credit scores for getting the best car loans, most drivers consider the FICO score. This is the most used credit score by lenders, and it ranges from 300 to 850. Luckily for people looking for the best car loans, there is a range of scores that lenders will accept. According to Investopedia, lenders prefer to work with borrowers who fall into the prime range of credit scores. The range is 661 or higher.

However, there are many car financing options for people with bad credit. In fact, 11.86% of approvals fall into the subprime category, which ranges from 501 to 600. However, these approvals are usually for people looking for the best used cars instead of new options. They may also have higher interest rates than people with higher credit scores, so they won’t be the best car loans. 

People with a 700 credit score or better will have several options for the best car loans. Of course, income also comes into play for financing a car. 

What are the best car loans?

There are different ways to finance a vehicle. However, most people consider whether or not they want a direct or an indirect car loan. Both can offer some of the best car loans, but they provide different experiences. With direct lending, the borrower goes directly to the lender to seek approval. They often do this before visiting dealerships.  

However, many buyers also go the indirect route when looking for the best car loans for new or used options. In this case, they’ll typically fill out a loan application, and the dealer will shop it around to their network. Often, they’ll first try it with whatever automaker they represent. For example, if you’re at a Dodge dealer, they’ll try and go through Chrysler Capital to secure financing. 

Both types of car loans have pros and cons. With direct lending, there’s no going through a third party, but you also need separate applications for different lenders. For indirect lending, you’ll get multiple offers for approval, but the dealership has the right to raise your APR. 

Overall, there are several options for financing a car. Yes, the credit score is important and can stop a person from being approved, but there are other factors at play. This is the case for people looking for new options or the best used cars.