Acquiring an auto loan with a credit score of around 700 can seem intimidating. While a 700 credit score is measured as “good”, lenders may still view you as somewhat of a risk compared to those with “excellent” credit scores well over 750. However, there are still many financing options available to help you get approved and get a competitive interest rate.
Understanding Your Chances of Approval
The first thing to understand is that even with a credit score of around 700, you actually have a very good shot at getting approved for an auto loan from many lenders. Here’s a quick breakdown:
Credit Score Ranges and Loan Approval Odds
- 750+: Considered “excellent” credit. Approval odds are very high with the lowest available rates.
- 700-749: Considered “good” credit. Lenders view you as a low-moderate risk. Approval odds are good- very good at most reputable lenders.
- 680-699: On the low end of “good” credit. Considered moderate risk. The odds of approval depend more on specific details of your credit history and profile. Still decent odds overall.
- < 680: Credit considered “fair” or below. Approval starts to become less guaranteed and may require more legwork or a co-signer from someone with a higher score.
So while you may not have the highest odds or get the lowest possible rates, the chances of getting approved for an auto loan with a score in the high 600s/low 700s are still quite favorable overall. That said, there are some things you can do to further strengthen your chances.
Ways to Boost Your Odds
A few things can help make your loan application more attractive and push your odds of approval over the top:
- Get pre-approved: Having a pre-approval from one reputable lender in hand shows other lenders you’ve been deemed “financeable.” This can give your subsequent applications a boost.
- Pay down credit balances: Freeing up available credit by paying down balances signals you manage credit responsibly. Aim for credit utilization under 30% of your limits.
- Have steady employment: Lenders like stability, so at least 2+ years with the same employer strengthens your application.
- Keep older accounts active: Closing long-standing accounts can lower your score. Continuously using older cards shows a long positive credit history.
- Consider a co-signer: Adding someone with excellent credit as a co-signer guarantees their strong payment history behind yours and gets you their better interest rates.
Taking steps like these helps maximize your approval odds and chances of the best terms, even if your score is on the lower end of the “good” credit range.
Understanding Rates and Terms
Once you’ve submitted your auto loan applications, the next key step is understanding the different rates and terms you may be offered based on your 700+ credit score. Comparing options objectively is critical to securing the lowest-cost financing.
Loan Rate Ranges
Auto loan interest rates tend to correlate closely with a customer’s credit profile. As a general rule of thumb for a 700 credit score:
- Best new car rates: 3.50-5.50%
- Used car rates: 4.00-6.00%
- Longer term rates: Slightly higher than the above rates
- Shorter term rates: Can be lower than the above rates
However, rates will vary based on exact score, loan amount, lender, and current market conditions. The goal is to get as close to the low end of these estimated ranges as possible.
Loan Term Options
Common auto loan terms range from 24 to 84 months. The most obtainable terms for a 700+ credit score individual are:
- 24-36 months: Lower monthly payments but the highest total interest paid.
- 48-60 months: Good balance of affordable payments and total interest cost.
- 60-72 months: Longer terms will give you the lowest payments but the most total interest paid overall.
Use a car payment calculator to compare the total costs of different combinations. Generally, keeping the term shorter than the car’s expected lifespan is recommended.
Account Fees to Watch For
Be sure to closely examine all additional fees when comparing loan quotes:
- Origination fees: One-time fees to process the loan, usually $0-1% of the loan amount.
- Prepayment penalties: Avoid loans with fees for paying off early.
- Late fees: Usually $25-35 for payments over 15 days late. Ask what constitutes a late payment.
Finding the loan deal with the lowest overall interest rate after factoring in all applicable fees is your goal. Be sure to compare apples to apples.
Getting Loan Quotes and Comparing Offers
Now that you understand your approval odds and rate/term factors, it’s time to actively seek multiple loan quotes online and over the phone. Comparing offers side-by-side is key to finding a great deal. Here’s the process:
Get Loan Quotes from Several Lenders
- Apply online or visit local bank/credit union branches and auto lenders. Many will provide instant loan decisions.
- For bigger loans over $15,000, consider subprime lenders who can offer competitive rates for mid-600s+ scores.
- Get prequalified through lending sites like AutoGravity or AutoSlash. They connect you with multiple lenders simultaneously.
- Check your dealership’s lending partner as well. They may be able to match or beat other quotes.
- Ask any credit unions you belong to for an auto loan offer too. Often their rates crush other lenders.
Try getting quotes from 3-5 different lenders in total. This exposes you to varied rates.
Compare Loan Offers Objectively
Once you have offers in hand, compare them side-by-side in a spreadsheet taking into account:
- Interest rate (%)
- Total finance charges over loan term
- Monthly payment amount
- Loan term (months)
- Fees (origination, prepayment penalties)
- Late payment policies
Ensure you’re comparing the same loan amount, term length, and additional fees when weighing options. The goal is the lowest interest rate and overall finance charges after fees.
Negotiate & Secure Your Best Offer
Don’t be afraid to negotiate further. Mention other offers to your preferred lender and ask if they can improve their rate or waive any fees. Thank lenders for their consideration, even if you go with a competitor. Choose one deal and lock in the finalized offer and rates in writing before closing.
Doing diligent research and shopping around gives you the power to secure a great auto loan with a credit score right around 700. Just make sure to compare apples to apples. Stick to the most transparent offers with the best overall rates and terms for your situation.
Closing the Loan and Maintaining Good Credit
Navigating the approval and offer stages is no small feat. But the process isn’t quite over yet. Closing out your auto loan properly and maintaining solid credit habits post-purchase are additional critical tasks.
Finalize Paperwork and Close the Loan
Once you’ve selected your ideal lender offer, the final steps are:
- Sign loan documents and complete the verification process.
- Apply for vehicle title/registration and finalize insurance policy.
- Pay the remaining down payment and fees to the dealer or lender.
- Take delivery of your new (or used) vehicle!
Be sure no stipulations were missed on either end. Keep all records together for future reference too.
Maintain Positive Credit After Closing
Responsible ongoing loan payments keep your good score intact:
- Set reminders for monthly due dates to avoid late payments.
- Pay more than minimums if the budget allows to pay off sooner.
- Don’t take on new debt until the auto loan balance drops over time.
- Continue checking your credit reports/scores annually for free.
- Inquire about refinancing if rates drop in future years.
Proper credit stewardship keeps access to competitive loans open. Enjoy your new wheels!
FAQs About Auto Loans with 700+ Credit Scores
Here are answers to some common questions borrowers have when trying to obtain an auto loan with a credit score around 700:
Will my job and income history impact the approval?
Yes, lenders strongly consider your employment, income stability, and ability to afford monthly payments when reviewing applications. At least 2 years with your current employer strengthen applications.
What if I have some negative items on my credit report?
Individual negative marks like a few missed payments may be overlooked depending on their age and your overall positive credit profile. Too many or very recent negatives will hurt your odds and rates.
Is a co-signer recommended with my credit score?
Having a co-signer with excellent credit is generally not necessary with a credit score of 700 or higher. This indicates you have well-established credit on your own that most lenders will find approvable. However, a co-signer can potentially help qualify you for the most competitive interest rates available. It’s an option to consider if you want the lowest monthly payments possible.
What documents do I need to provide as part of the application?
Lenders will typically require proof of identity like a driver’s license, proof of income like recent pay stubs or tax returns, and proof of residence like a utility bill. They may also want the vehicle value based on its make/model/year from a resource like Kelley Blue Book. Come prepared with electronic copies of all relevant documentation to provide a smooth application process.
When will I receive a decision and can I improve my approval chances after being denied?
Many lenders can provide an instant decision upon submitting an online application. If not, a decision is usually given in 1-2 business days. If denied, ask the lender why and how to strengthen a future reapplication. Common factors to address are making larger down payments, cosigning, paying down debts, or waiting for negative marks to age further on your credit report. Approaching different lenders may also yield different results.