Greetings and welcome to our comprehensive guide on auto loans for individuals with a credit score of 637. Your credit score is an essential factor in determining your eligibility for obtaining a loan, including an auto loan. Having a credit score of 637 may not be ideal, but it doesn’t mean all hope is lost. With the right information and approach, you can still secure an auto loan that fits your budget and preferences.
Introduction
When it comes to financing a car, your credit score plays a significant role. It is a three-digit number that represents your creditworthiness and serves as a reflection of your credit history. A credit score between 300 and 850 is usually used to determine if you are eligible for an auto loan.
A credit score of 637 falls within the “fair” credit score range. This means that while you may not qualify for the best interest rates, you can still find lenders who are willing to finance your vehicle purchase.
However, it’s essential to note that finding an auto loan with a 637 credit score may take a little more effort than if you had a higher credit score. It would be best if you prepared to negotiate with lenders and explore your options thoroughly.
In this guide, we’ll discuss everything you need to know about getting an auto loan with a 637 credit score, including information on how to improve your credit score to increase your chances of getting approved.
How a Credit Score Affects Your Auto Loan
Your credit score is one of the primary factors that lenders consider when determining your auto loan eligibility. The higher your credit score, the better your chances of getting approved and securing favorable loan terms, such as lower interest rates and better repayment terms.
However, a credit score of 637 is considered “fair,” which means you may not qualify for the best interest rates or loan terms. Lenders may see you as a higher-risk borrower, as individuals with poor credit scores are statistically more likely to default on loans.
When lenders view you as a higher-risk borrower, they may charge you higher interest rates to compensate for the risk they’re taking on. This means you’ll end up paying more for the loan than someone with a better credit score, which can add up over time.
It’s essential to keep in mind that your credit score isn’t the only factor that affects your auto loan eligibility. Lenders consider other factors such as your income, employment history, and debt-to-income ratio when assessing your creditworthiness.
Therefore, it’s crucial to work on improving your credit score and addressing other factors that lenders consider when applying for an auto loan.
Improving Your Credit Score
If you’re struggling with a fair credit score, there are steps you can take to improve your score and increase your chances of getting approved for an auto loan. Here are some tips:
1. Check Your Credit Report
Your credit report contains all the information used to calculate your credit score. It’s essential to monitor your credit report regularly and dispute any errors that may be dragging down your score.
2. Pay Your Bills on Time
Payment history is the most significant factor in calculating your credit score. Paying your bills on time and in full each month can help improve your credit score over time.
3. Reduce Your Debt
Your debt-to-income ratio is another factor that lenders consider when reviewing your loan application. Reducing your debt can help improve your credit score and increase your chances of getting approved for an auto loan.
4. Don’t Apply for New Credit Too Often
Every time you apply for new credit, it appears on your credit report as a hard inquiry. Too many hard inquiries can negatively impact your credit score.
5. Use Your Credit Responsibly
Using your credit responsibly by making timely payments and keeping your credit utilization low can help improve your credit score.
6. Consider a Secured Credit Card
If you’re struggling to get approved for an unsecured credit card, consider applying for a secured credit card. Secured credit cards require a deposit upfront, which acts as collateral and can help you establish a positive credit history.
7. Seek Professional Help
If you’re struggling to improve your credit score, consider speaking with a credit counselor or financial advisor. They can help you develop a plan to improve your credit score and achieve your financial goals.
Getting an Auto Loan with a 637 Credit Score
Now that you know how your credit score affects your auto loan eligibility let’s discuss how you can find lenders that will work with your credit score to obtain an auto loan.
1. Research Lenders
One of the essential steps to getting an auto loan with a 637 credit score is to research lenders who are willing to work with individuals with fair credit.
Some lenders specialize in working with individuals who have less-than-perfect credit, while others may be more selective. Research various lenders, including banks, credit unions, and online lenders, to find one that fits your needs and budget.
2. Get Pre-Approved
Before shopping for a car, consider getting pre-approved for an auto loan. This involves submitting a loan application and having a lender review your credit history and financial information to determine the loan amount and interest rate you qualify for.
Getting pre-approved can help you determine your budget and give you a better idea of what type of car you can afford. It also shows the dealership that you’re a serious buyer and can help you negotiate a better deal.
3. Consider a Co-Signer
If you’re having difficulty getting approved for an auto loan with a 637 credit score, consider finding a co-signer. A co-signer is someone who agrees to take on the responsibility of repaying the loan if you default.
Having a co-signer can increase your chances of getting approved and may also help you qualify for better loan terms, such as a lower interest rate.
4. Be Prepared to Negotiate
When shopping for an auto loan with a 637 credit score, it’s essential to be prepared to negotiate with lenders. This means being honest about your credit score and financial situation and asking for better loan terms whenever possible.
Don’t be afraid to shop around and compare offers from different lenders to find the best deal.
637 Credit Score Auto Loan Table
Lender |
APR |
Loan Term |
Loan Amount |
|---|---|---|---|
Bank of America |
3.24% – 6.74% |
12 – 75 months |
$7,500 – $100,000 |
Capital One |
3.99% – 24.99% |
36 – 72 months |
$4,000 – $40,000 |
Carvana |
3.90% – 27.90% |
36 – 72 months |
$1,000 – $50,000 |
LightStream |
2.49% – 9.49% |
24 – 84 months |
$5,000 – $100,000 |
Friendly Credit Union |
4.24% – 12.99% |
12 – 84 months |
$2,500 – $50,000 |
FAQs
1. Can I get an auto loan with a credit score of 637?
Yes, it’s possible to get an auto loan with a credit score of 637, but you may not qualify for the best interest rates or loan terms.
2. What kind of interest rates can I expect with a 637 credit score?
Interest rates for auto loans can vary widely based on several factors, including your credit score, income, and debt-to-income ratio. With a 637 credit score, you can expect to pay higher interest rates than someone with a higher credit score.
3. Should I get pre-approved for an auto loan?
Getting pre-approved for an auto loan can help you determine your budget and give you a better idea of what type of car you can afford. It also shows the dealership that you’re a serious buyer and can help you negotiate a better deal.
4. Can having a co-signer help me get approved for an auto loan with a 637 credit score?
Yes, having a co-signer can increase your chances of getting approved for an auto loan and may also help you qualify for better loan terms, such as a lower interest rate.
5. How can I improve my credit score?
You can improve your credit score by paying your bills on time, reducing your debt, monitoring your credit report, and using your credit responsibly.
6. Can I refinance my auto loan if my credit score improves?
Yes, if your credit score improves, you may be able to refinance your auto loan to get better loan terms, such as a lower interest rate or monthly payment.
7. Can I sell my car if I have an outstanding auto loan?
Yes, you can sell your car if you have an outstanding auto loan. However, you’ll need to pay off the remaining balance of the loan before transferring ownership of the vehicle.
8. What should I do if I can’t make my auto loan payments?
If you’re struggling to make your auto loan payments, contact your lender to discuss your options. You may be able to refinance the loan or get a deferment or forbearance to temporarily suspend payments.
9. Can I get an auto loan with a 637 credit score without a down payment?
It’s possible to get an auto loan with a 637 credit score without a down payment, but it may be more challenging. Putting down a down payment can help you qualify for better loan terms and reduce the overall cost of the loan.
10. How long does it take to get approved for an auto loan?
The time it takes to get approved for an auto loan can vary depending on the lender and your credit history. Some lenders may provide pre-approval within minutes, while others may take several days to review your application.
11. How much should I budget for a car payment with a 637 credit score?
When budgeting for a car payment with a 637 credit score, it’s essential to consider all the associated costs, such as interest rates, loan terms, and any additional fees. Use an online auto loan calculator to determine a monthly payment that fits your budget.
12. How long should my auto loan term be?
The length of your auto loan term will depend on your financial situation and preferences. However, it’s essential to choose a loan term that fits your budget and doesn’t result in you paying more interest than necessary.
13. Can I get an auto loan with a 637 credit score if I have a bankruptcy in my credit history?
If you have a bankruptcy in your credit history, it may be more challenging to get approved for an auto loan with a 637 credit score. However, some lenders specialize in providing loans to individuals with less-than-perfect credit or a bankruptcy in their history.
Conclusion
In conclusion, getting an auto loan with a 637 credit score may require extra effort and research, but it’s possible. By following the tips outlined in this guide, you can improve your credit score, research lenders, and negotiate favorable loan terms to finance your vehicle purchase.
Remember to shop around, monitor your credit report, and be prepared to negotiate with lenders. With the right approach, you can secure an auto loan that fits your budget and preferences.
Take Action Now
If you’re ready to take the next step in obtaining an auto loan, start by researching lenders and getting pre-approved for a loan. Don’t be afraid to ask questions and negotiate with lenders to get the best possible loan terms for your situation.
Closing/Disclaimer
While we strive to provide accurate and up-to-date information, this guide is not intended to be a substitute for professional financial advice. We encourage you to consult with a financial advisor or credit counselor before making any financial decisions, including obtaining an auto loan.
We make no representations or warranties about the accuracy or completeness of the information provided in this guide. Your use of this guide is at your own risk. We disclaim any liability for any damages or losses that may arise from your use of this guide.