Auto Financing for New and Used Vehicles - InTouch Credit Union (2024)

FAQs

What credit score do credit unions use for auto loans? ›

What credit score do auto lenders look at? The three major credit bureaus are Experian, TransUnion and Equifax. The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage. We're going to take at look at FICO® since it has long been the auto industry standard.

But if you want a second loan, the lender might expect you to have excellent credit (800+), to reduce risk. If you can get approved for two auto loans, you must make sure you can comfortably afford the additional costs. Avoid taking on a second loan if there's a chance you won't be able to keep up with the payments.

Because credit unions are nonprofit organizations, Members can typically enjoy lower interest rates compared to banks. In fact, depending on how much you borrow for your car, you could save thousands of dollars over the life of the loan compared to a loan from a bank.

According to Credit.com, Edmunds, and Bankrate, shopping around for the best terms and interest rates for an auto loan or mortgage counts as a single hard inquiry.

The Bottom Line. If you have a 550 credit score, you may still be able to get approved for an auto loan. In addition to the right documents, a possible cosigner, and a larger down payment, you also need to work with the right lender. The Car Connection is here to help you find financing.

Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.

It's relatively simple to finance a car. But can you have two car loans? Yes, but getting a second loan when you're still making payments on your first can be a bit more challenging. You will need a strong credit score and adequate, stable income to cover the monthly payment on both car loans.

Taking out a second car loan can significantly impact your credit score, but it doesn't have to have long-term effects. While your debt-to-income ratio will increase, resulting in lower credit, you can improve your credit score over time by staying consistent with your payments.

You can apply for a car loan when you already have one, but getting a second loan might be more difficult than it was when you got the first loan. This is because your debt-to-income (DTI) ratio will be higher for the second loan because you will have the added debt of the first loan.

For the most part, auto dealers assume you want to finance through their company. They are usually willing to negotiate prices, benefits, and some features with the intention of 'hooking' you into a great deal. Of course, dealers make most of their money from loan interest car payments.

Is it better to go through your bank for a car loan? ›

You don't need to decide between bank and dealership financing right away. In fact, it's beneficial to check your rates with a bank — and some online lenders — before you visit a dealership. The primary benefit of going directly to a bank or credit union is that you will likely receive lower interest rates.

What is a good APR for a car loan with my credit score and desired vehicle? If you have excellent credit (750 or higher), the average auto loan rates are 5.07% for a new car and 5.32% for a used car. If you have good credit (700-749), the average auto loan rates are 6.02% for a new car and 6.27% for a used car.

How fast will a car loan raise my credit score? There's no set time frame for how long it takes a car loan to improve your credit score. After buying a car, you can expect to see your score improve after making monthly payments on time and paying down your loan balance.

In most cases, an auto loan preapproval has the potential to impact your credit. For example, if you go through the preapproval process with the lender and submit all of your information and documentation, the application will typically result in a hard inquiry, which can temporarily impact your credit score.

Preapproval is still just an estimate — it doesn't guarantee approval of financing. Whether you get prequalification or preapproval, you'll still have to clear a formal application process.

The base FICO score is also called FICO Score 8 or 9. It's not designed specifically for auto loans, but many lenders use it. It's a number between 300 and 850, and a higher score means that a person is more likely to make loan payments on time.

Equifax and Experian are the most commonly used credit bureaus by auto lenders. They offer services that are directed specifically at the auto industry, and each gets a portion of their revenue from the industry.

Get Your FICO® Score for Free!

It is used by FCU, other financial institutions, and businesses when you apply for loans, an apartment, insurance, or even a job. That's why we want to give you access to your score whenever you want – all for free.

FICO score 8 and 9 are commonly used for student loans, personal loans, medical loans, credit card lines and auto loans. However, there are industry-specific FICO versions for certain types of debt as well, including auto loans, credit cards and mortgage lending.