Short answer: You need a credit score above 670 (FICO®) to potentially qualify for a car loan without a cosigner. However, score requirements vary from dealer to dealer.
Long answer: Cosigners are usually required if you have a bad credit score or short credit history. Having a cosigner with a good credit score helps you build your own credit history since you’re able to make on-time payments while relying on the guarantee provided by your cosigner in case you are unable to pay back the loan. Cosigners are usually recommended by auto loan lenders for people who are in the non-prime to deep subprime categories (500-660).
The lower your score, the higher the Annual Percentage Rate (APR) and other relevant interest rates get. However, even with a prime to super prime score, you may not qualify for a car loan if you have a bad debt-to-income ratio or no money for a sizable down payment.
One strategic move to make before you buy that dream car is to build your credit score through tools like StellarFi®, which help you build your credit with every recurring bill you pay.
Other tips to consider:
- Work towards putting a sizable enough down payment to decrease your monthly car note.
- Build your income by changing jobs, negotiating for a higher salary, or paying off any large debts you currently have.
- Shop around for the best auto loan deals once you’re set on the car you want.
Alternatively, consider buying a cheaper car or used car until you can save up enough to buy the one you really want.
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