Whether you buy a new car, used car or repossessed car, you’ll need to pay for the vehicle before you take it home. Unless you have the cash upfront, you’ll have to take out a car loan. One of the biggest predictors in the type of loan you get and the interest rate you pay is your credit score. Knowing how important this three-digit number is, what do you need to get a decent used-car loan?
Average Credit Scores for New and Used Cars
According to a 2017 Experian report, the average credit score for a new-car loan was 713 and 656 for a used-car loan. A repossession is no different than a used car in the eyes of a bank. But, it’s your responsibility to do your homework. A used car from a dealership might have a warranty, but a repossession will not (unless it’s from the manufacturer). If you take out a loan for a repo and it ends up not running, you are still responsible for paying back the loan.
So, what happens if you don’t have the average 656 credit score? You can still get a loan, but you can expect to pay more in interest rates. Someone in the low 700s might see interest rates of 5%, while someone in the low 500s might see 15%. Also, the state you live in makes a difference, as some states give higher insurance rates to those with poor credit.
To break things down, here is a chart of credit scores vs average APRs on new and used vehicles, courtesy of Experian.
| Credit score | Average APR, new car | Average APR, used car |
| Superprime: 781-850 | 3.68% | 4.34% |
| Prime: 661-780 | 4.56% | 5.97% |
| Non Prime: 601-660 | 7.52% | 10.34% |
| Subprime: 501-600 | 11.89% | 16.14% |
| Deep subprime: 300-500 | 14.41% | 19.98% |
Before You Start Shopping
One of the benefits you have when buying a repo car is the financing. When you purchase a repo directly from a lender or credit union, they are willing to work with you on the financing. They are banks, after all, and they make money by lending money.
Because it can take time to find the perfect repo car, use this period to check your credit profile and make improvements. You can request a copy of your credit report from the three major credit bureaus – Equifax, Experian and TransUnion – once a year. Visit AnnualCreditReport.com or call 1-877-322-8228.
Once you know what your score is, you can get a realistic idea of what interest rates you will be paying. If you have to delay your repo car purchase, bring your credit score up by doing the following:
- Pay your bills on time
- Avoid applying for new credit
- Keep credit card balances low relative to your limits
- Leave old accounts open
For a complete list of repossessed cars, trucks, ATVs, RVs, boats, etc., visit RepoFinder.com today. Our list includes banks, lenders and credit unions that have repossessed vehicles and are willing to work with the public to sell cars and provide financing.