How Your Credit Score Affects Car Financing

Posted on April 07, 2025

How Your Credit Score Affects Car Financing

Buying a car is a major life milestone. For many, it's one of the biggest purchases they'll make outside of buying a home. But what often gets overlooked in all the excitement of choosing a make, model, and color is how deeply your credit score impacts the financing process.

Whether you're buying your very first car, upgrading to something new, or even just trying to get back on the road after a financial hiccup, your credit score holds more weight than you might think.

Let’s walk through how your score affects car buying, what you can do to improve it, and how dealerships like Sunrise of Elmont help people from all credit backgrounds drive home happy.

What Is a Credit Score and Why Does It Matter?

Your credit score is a three-digit number, typically ranging from 300 to 850, that tells lenders how likely you are to repay borrowed money. Think of it like your financial reputation. The higher the number, the more creditworthy you appear.

Scores are calculated using data from your credit history—things like:

Your payment history
The amounts you owe
Length of credit history
Types of credit used
Recent inquiries

Most lenders use the FICO score model. Here’s how it typically breaks down:

800–850: Exceptional
740–799: Very Good
670–739: Good
580–669: Fair
300–579: Poor

Why does this number matter when buying a car?

Because your credit score directly affects:

Whether you qualify for a loan
What interest rate you’ll be offered
How much your monthly payments will be
Whether you’ll need a cosigner
How much down payment you’ll be required to make

How Your Score Affects Interest Rates

Here’s a simple example that really puts things into perspective:

Let’s say two people are buying the same vehicle—let’s say it’s a 2018 Honda Accord priced at $20,000.

Person A has a credit score of 780 and qualifies for a 3.5% interest rate.
Person B has a score of 610 and is offered a 14.5% interest rate.

Both want to finance over 60 months (5 years). Here's how it plays out:

Person A: $364/month
Person B: $471/month

That’s a difference of over $100/month—and more than $6,400 over the life of the loan!

Improving your credit even slightly could drop your interest rate and save you thousands. In fact, even a 20-point increase in your score could mean a difference of $20 to $50 a month in your payment—and that adds up quickly.

Plus, a higher score may allow you to negotiate better terms, like reduced fees or even a longer loan period with less interest paid over time.

What Lenders Look For (Besides Just the Score)

Believe it or not, the score isn’t everything. While it's a major factor, dealerships and lenders like the team at Sunrise of Elmont also look at:

Income: Do you make enough to afford the payments?
Employment status: Is your job stable?
Debt-to-income ratio: How much of your income is already going to other debts?
Credit report details: Are there any bankruptcies, repossessions, or delinquencies?
Down payment amount: Can you put money down to lower the loan amount?
Loan-to-value ratio (LTV): How much are you borrowing compared to the value of the car?

This is where working with an experienced dealership really pays off. A good finance team won’t just glance at your score—they’ll look at the full picture and advocate on your behalf.

What If You Have Bad Credit?

Let’s be real: not everyone has perfect credit—and that’s okay.

At Sunrise of Elmont, we’ve helped hundreds of customers with credit challenges find financing that works for their budget and lifestyle. Whether you've missed a few payments, gone through a tough financial period, or you're just starting to build credit, you're not out of options.

Here are some ways to boost your approval odds if your score is on the lower end:

1. Make a Bigger Down Payment

Putting more money down reduces the lender's risk. If you're able to put down 10% or more, you'll likely get better loan terms—even with a lower score.

2. Get a Cosigner

A cosigner with a stronger credit profile can help you qualify for a loan you wouldn’t otherwise get. Just make sure your cosigner understands their responsibility.

3. Work With Credit-Friendly Dealerships

Not all dealerships are the same. Some specialize in helping people with all types of credit situations. Sunrise of Elmont is one of those places—we work with lenders that consider more than just your score.

4. Shop Around

Don't accept the first loan offer you receive. Compare multiple quotes, including from credit unions and online lenders. And don’t worry—if all your credit checks happen within a short time frame (about 14-30 days), they’ll typically count as a single inquiry on your credit report.

Real-Life Example: Nicole’s Story

Let’s take a closer look at what a credit-based car buying experience can really feel like—from someone who lived it.

Nicole G. came to Sunrise of Elmont unsure of her chances. She had some blemishes on her credit report—a few late payments and no major credit history. For many dealerships, this would mean a rejection or sky-high interest rates.

But not here.

We sat down with Nicole, reviewed her full financial picture—not just her score—and created a financing plan that worked for her. She got approved, found a car she loved, and drove home stress-free.

And we didn’t stop there. We helped her drop off her rental car and even delivered her new ride to her front door.

Nicole left us a glowing review:

“They really made it so low stress and easy. Highly highly recommend these guys.”

Tips to Improve Your Credit Before You Apply

Even if you're not buying tomorrow, the best time to start preparing is now. Here are some easy ways to boost your credit:

1. Check Your Credit Report

Use a free service like AnnualCreditReport.com to check for errors. Dispute anything that doesn’t look right.

2. Pay On Time

Your payment history is the most important part of your credit score. Set up reminders or autopay to stay on track.

3. Pay Down Credit Cards

Try to keep your credit utilization below 30%. For example, if you have a $1,000 credit limit, aim to carry no more than $300 at any time.

4. Avoid New Credit Applications

Every new inquiry can drop your score a few points. Don’t open new accounts before applying for a car loan.

5. Keep Old Accounts Open

Length of credit history helps. Even if you're not using an old card, keeping it open can benefit your score.

Improving your credit doesn’t just help you get approved—it gives you more control, better rates, and peace of mind.

Why Sunrise of Elmont Is Different

We get it—credit isn’t just a number. It’s a story. A journey. And sometimes, it’s a little complicated.

At Sunrise of Elmont, we take the time to understand your full story. We don’t judge. We listen. Then we work hard to find a solution that fits your life, your budget, and your goals.

Whether you have excellent credit or you're working to rebuild it, we’ll help you: