Can I get approved for a car loan?


While you won’t know for sure whether you can get approved for a car loan until you actually apply, it’s not too hard to get an idea of what your chances may be, and how to maximize them.

First, keep in mind each lender is different and may evaluate an auto loan application on a different set of criteria. Online lender RoadLoans, for example, uses a unique scorecard based on years of lending experience to decide on applications. So even if you happen to be declined by one lender, it may not be the case with another.

There are a number of factors common to many auto lending decisions, however, and credit score is a major one.

Just as lenders are different, so too are consumers, who have their own set of financial circumstances and credit history which result in their credit scores.

Credit history is important because people with good credit are more likely to be approved for an auto loan, and better terms, than those with bad credit.

But what is good and bad credit?

Bad or poor credit generally is considered a FICO score* of around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Associations (reported by Associated Press),,, Investopedia, and others. And the Congressional Budget Office identified a FICO score of 620 as the cutoff for prime loans, associated with better credit.

Credit history is compiled in credit reports by the main reporting agencies, Experian, Equifax and TransUnion, and it’s a good idea to check your reports for errors that may limit access to financing before you apply.

Some of the other factors often taken into account by lenders looking at car loan applications include work history and income, levels of debt and expenses, debt-to-income ratio, the loan amount and type of vehicle sought, and money down.

How to boost your chances of auto loan approval

Here are three helpful approaches, particularly if you have bad or no credit history.

Put money down

A down payment on a car or a trade in, or both, will lower the potential loan amount needed to buy a vehicle and show the lender your commitment to the purchase. If approved, a smaller loan amount may also reduce what you pay in interest charges. The larger the down payment, the more you may benefit.

Add a cosigner or co-borrower

The addition of a cosigner or co-borrower to the application tells a lender you’re intending to share responsibility for the loan, and so reduces potential risk. A cosigner, such as a family member or close friend, guarantees to make any missed payments or repay the full loan amount if you fail to do so. A co-borrower is a joint applicant, and each borrower is responsible for repaying the note and has equal rights to use and ownership of the car.

Build a good credit history

Establishing a record of good habits such as paying bills on time, keeping well within your credit limit (not more than 30 percent of your total limit) and only applying for the credit you need will help you get and keep a good credit score, says the Consumer Financial Protection Bureau. If you have no credit history behind you, the bureau recommends options including taking out a secured credit card; becoming an authorized user on the card of someone else, such as a family member; obtaining a store card, or becoming a cosigner or joint applicant on a card.

Calculate what may work

Whatever your credit profile, it makes sense to apply for a loan you can afford, so use our auto finance calculators to estimate how the numbers add up.

How much can you spend on a car? Using the affordability calculator, enter your desired monthly payment, loan term, APR and down payment. For example, a monthly payment of $315 with a 60-month loan term, three percent APR and down payment of $2,000 suggests you could afford a loan up to $19,530.40; about the average price of a used car, which stood at $19,402 toward the end of 2017.

What can I afford each month? The monthly payment calculator will help. By typing in loan amount, loan term, APR and down payment, and then adjusting the numbers, you’ll get a picture of what scenarios may work for your budget.

How long will it take to know if I can get approved for a car loan?

There are various options available to car buyers seeking a loan, from walk-in banks and credit unions to dealers and online finance companies. Applying online with a trusted lender like RoadLoans offers several advantages. Our short, secure application takes just minutes to complete, from work, home or on the go, and we provide instant loan decisions.

If approved, you’ll receive multiple offers tailored to your car-buying needs. Select an offer, download the loan packet and visit your preferred dealer, included in the documents, located nearby. Alternatively, use our dealer locator to select another auto dealership within our national network.

Getting preapproved with RoadLoans also means you can visit the dealership brimming with the confidence of a cash buyer, already knowing exactly how much car you can afford, and focus on negotiating the best price for your vehicle.

When it’s time to find financing for a car purchase, there may be no crystal ball to say whether you’ll get approved, but knowing what to expect and how best to approach the application will strengthen your position.

Apply for a car loan online.


*FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.

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