How Credit Score Affects Auto Loan Payments

What Is a Credit Score?

A credit score is a three-digit number that lenders use to evaluate your creditworthiness. Both FICO and VantageScore models use a range of 300 to 850, with higher scores indicating lower risk to lenders.

Your score is based on information in your credit report, including your payment history, amounts owed, length of credit history, new credit, and types of credit in use.

Sources: Self Financial, Energy One Federal Credit Union

Your Credit Score and Auto Loan Payments

How Lenders Use Your Credit Score

When you apply for an auto loan, lenders review your credit score and credit report to determine whether to approve you and at what interest rate. Many auto lenders use credit scoring models such as FICO Auto Score and VantageScore, which are designed to assess the risk of auto loan borrowers.

A higher score generally signals to the lender that you are more likely to make payments on time, so you may be offered a lower interest rate. Conversely, a lower score suggests higher risk, which often leads to higher rates.

Sources: Upgrade, Energy One Federal Credit Union

Impact on Interest Rates and Payments

The interest rate on your auto loan directly affects your monthly payment and the total cost of the loan. Even a small difference in APR can add up to thousands of dollars over the life of the loan.

According to Experian data, average APRs vary significantly by credit tier. For example, in Q1 2026, the average new car APR for super prime borrowers (781+) was 4.55%, while deep subprime borrowers (300-500) faced an average APR of 16.01%. For used cars, the spread was even wider: 6.30% for super prime and 21.77% for deep subprime.

These figures are averages and may not reflect the rate you are offered. Lenders consider additional factors, such as your income, debt-to-income ratio, and the vehicle's age and value.

Higher credit scores generally lead to lower APRs.
The gap between the best and worst credit tiers can be more than 10 percentage points.
Lower APRs mean lower monthly payments and less interest paid over the loan term.

Sources: Experian, Upgrade, Self Financial, Energy One Federal Credit Union

Example: How Credit Score Affects Monthly Payment

To illustrate the impact, consider a 60-month auto loan for $25,000. Using current average APRs from Experian for new cars, we can compare monthly payments for two credit tiers.

For a super prime borrower with an APR of 4.55%, the monthly payment would be approximately $467. Over the loan term, total interest would be about $3,022.

For a deep subprime borrower with an APR of 16.01%, the monthly payment would be approximately $608, and total interest would be about $11,497.

This example shows that a lower credit score can increase your monthly payment by more than $140, and the total interest paid can be nearly four times higher.

Sources: Experian

How to Improve Your Credit Score

If your credit score is not where you want it to be, there are steps you can take to improve it over time. Key factors that influence your score include payment history and credit utilization.

Focus on making all payments on time, reducing outstanding debt, and avoiding new credit inquiries when possible.

Improving your score can help you qualify for lower APRs, which can save you money on your next auto loan.

Pay all bills on time: Payment history is a significant factor in your credit score.
Reduce credit card balances: Keeping utilization low can help.
Check your credit report for errors and dispute any inaccuracies.

Sources: Energy One Federal Credit Union

Frequently asked questions

What are the credit score ranges for auto loans?

Credit scores range from 300 to 850. While exact categories vary, lenders often use tiers such as: deep subprime (300-500), subprime (501-600), nonprime (601-660), prime (661-780), and super prime (781+). These ranges help determine the interest rate you may be offered.

Sources: Experian, Self Financial, Energy One Federal Credit Union

Can a credit score below 600 affect my ability to get a car loan?

A score below 600 is often considered subprime or poor. Many lenders may still approve you, but you are likely to face higher interest rates and may be required to provide a down payment. Terms vary by lender, and some may require a higher score for the best rates.

Sources: Energy One Federal Credit Union, Experian

What credit score do I need to get the best auto loan rate?

The best rates are typically offered to borrowers with scores in the super prime range, usually 781 or higher. According to Experian data, average APRs for new cars in Q1 2026 were lowest for this group.