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A fair credit score of 650 generally seems to be sufficient for getting a new or used car loan. Consumers with a 650 credit score are classified as near prime or nonprime. You might not qualify for the best annual percentage rates (APRs) with a 650 credit score, but you may qualify for auto loan refinancing.

Auto refinancing pays off your original car loan and replaces it with new lending terms. Refinancing may be right for you if you need a lower monthly payment or lower interest costs over the life of your loan. (You may pay more interest over the life of the loan if you refinance with an extended term.)

Below we highlight how lenders may view a 650 credit score for a car loan.

Is It Possible To Get a Car Loan With a 650 Credit Score?

Getting a car loan with a 650 credit score is possible and not unusual for consumers with fair credit.

A credit score according to the major credit scoring models, including VantageScore® 4.0 and base FICO® Scores, can range from 300 to 850. A 650 credit score can be considered near prime, nonprime, and fair. It’s possible to get a car loan with a 650 credit score, but most car loan borrowers had a “good” credit score, which would mean it was above 660.

Recommended: Does Refinancing a Car Hurt Your Credit?

What Is a 650 Credit Score?

A 650 credit score is generally fair and nonprime, as the table below shows:

How Do Lenders View a 650 Credit Score for a Car Loan?

Lenders may view a 650 credit score as creditworthy but not necessarily worthy of the best terms and conditions for a car loan. Borrowers with a 650 credit score may pay higher finance charges on a car loan than borrowers with prime or super prime credit scores.

Lenders may view a 650 credit score as being near prime, which is generally good enough for borrowers to qualify for financing.

650 Credit Score Auto Loan Interest Rates

As a consumer, you may wonder whether and when to finance an auto loan. Refinancing might be right for you if you can secure a lower interest rate or if you need a lower monthly payment.

Recommended: Refinancing a Car Loan With the Same Lender

650 Credit Score Car Loan Terms

The near-prime credit risk category includes consumers with a credit score at or near 650. Car loan terms can range from one year to more than 85 months, including 144-month car loans. Longer terms may include higher interest rates and lower monthly payments compared with shorter terms.

Factors That Affect Auto Refinancing Approval

Here are some factors that can impact auto refinancing approval:

Credit Score

Lenders of auto refinance loans may consider the credit score of the borrower when determining whether or not to approve a loan refinancing request. Some borrowers with bad credit may not qualify. There’s also a cost to refinance a car, and applying for auto refinancing can hurt your credit score if the lender conducts a hard inquiry credit pull.

Debt-to-income Ratio

Banks, credit unions, and nonbank financial institutions generally like to see a debt-to-income ratio below 36%. Borrowers with high DTIs may have a harder time getting approved for auto loan refinancing than borrowers with low DTIs. That’s because DTI ratios help lenders evaluate an applicant’s ability to manage existing debt and future loan payments.

Income

Lenders generally require borrowers to have a steady income to qualify for auto loan refinancing. Borrowers with an annual income below $18,000 may have difficulty getting approved.

650 Credit Score Car Loan Repayment Schedule

Consumers with a 650 credit score may qualify for auto loan terms ranging from a few years to more than 85 months.

Term length and APR can affect your loan repayment schedule in terms of how much you pay each month. For example, an 8.99% APR car loan of $37K with a five-year term would feature 60 fixed monthly payments of $767.88. Borrowers are expected to make on-time payments over the life of the loan.

Applying for a 650 Credit Score Car Loan

Consumers with fair credit scores can apply for car loan financing through banks, credit unions, nonbank financial institutions, or dealerships. A consumer with a 650 credit score may qualify for auto loan financing, but nonprime consumers usually don’t qualify for the best rates.

You can explore auto refinancing for a lower APR, although you may pay more interest over the life of the loan if you refinance with an extended term. How soon can you refinance an auto loan?

You may have the option to refinance almost immediately.

Recommended: Car Payment With a Credit Card

The Takeaway

A 650 credit score is better than subprime, but it’s still below the general threshold of good credit. Borrowers with fair credit scores may have access to near-prime car loans.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What is a good APR for a car with a 650 credit score?

A good APR is subjective. For a car loan, it’s one that’s better than the industry average.

Can you get a $40,000 car loan with a 650 credit score?

Yes, some lenders may offer $40,000 in auto loan financing to borrowers with fair credit scores of 650. The interest rates might not be as attractive as they would be with a good or excellent score.

Can you finance a car with a 640 credit score?

Yes, certain lenders may offer new and used car loan financing to borrowers with fair or bad credit.

Can I refinance my car loan with a credit score of 650?

Yes, you can refinance your auto loan with a credit score of 650. If borrowers with deep subprime credit scores can access used car financing, it’s clear that other borrowers with a 650 credit score can refinance auto loan debt.

Photo credit: iStock/Goran13

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-008

Your loan-to-value (LTV) ratio is one of the metrics auto lenders use to help them assess the risk of offering you a car loan or auto loan refinancing. You can calculate LTV for your car with this simple formula: LTV = (Loan amount/appraised value of asset) x 100. The result is expressed as a percentage.

The ratio helps lenders compare the size of the loan to the value of the car that secures it. As the size of a loan increases in relation to value, the LTV ratio goes up, which signifies that the lender is taking on more risk. That’s typically something they’re not eager to do.

Calculating LTV yourself can be an important tool to help you determine how easy or how hard it may be for you to secure a loan and whether you might need to make a down payment.

What Is a Loan-to-Value (LTV) Ratio?

A loan-to-value ratio is a comparison between how much you’re borrowing and the value of the asset that will be used as collateral for that loan. In the case of an auto loan, the LTV compares the amount of the loan and the value of the car that’s securing the loan.

LTV can be used for any secured debt and is a frequent metric for banks deciding whether to offer mortgages to potential homebuyers.

How to Calculate the LTV of Your Car

If you’re interested in calculating an LTV ratio for a car, first divide the amount of the loan by the appraised value of the vehicle. Then multiply the result by 100 to express the LTV as a percentage.

The formula to calculate LTV is: (Loan amount/appraised value of asset) x 100 = LTV

LTV Examples for New Car Buyers

Here’s an example of LTV: You borrow $45,000 from an auto lender to buy a $45,000 car. The LTV in this example would be ($45,000/$45,000) x 100, or 100%.

But perhaps you want to borrow more money than the car is worth — say you add the price protection products like mechanical breakdown protection. In that case, your LTV could be greater than 100%.

For example, if you borrow $47,000 to buy a $45,000 car, your LTV will be ($47,000/$45,000) x 100, or 104.44%.

However, if you’re able to pay for some of the car in cash, you may not need to borrow the full value. In that case, your LTV could be less than 100%. Say you make a $9,000 down payment and borrow $36,000 in auto loan financing to buy a $45,000 car, your LTV would be ($36,000/$45,000) x 100, or 80%.

Using a Combined LTV for More Than One Loan

A combined loan-to-value ratio (CLTV) is a metric most commonly used to measure how much outstanding debt there is against a home, including all liens and loans.

In some cases, a CLTV might be used for auto loans as well. For example, say you’re trying to refinance your auto loan, if you have an old auto loan and a personal loan taken out against the equity you’ve built up in your car, a new lender might use CLTV.

You can calculate CLTV ratios by adding up the total balance of all outstanding loans and dividing by the value of the vehicle.

You can find the value of a new or used vehicle by looking it up in Edmunds or the Kelley Blue Book

What Is a Good LTV Ratio?

Every lender will have its own rules about what LTV ratios are acceptable. But in general, an LTV of more than 115% may make it difficult to acquire a loan on a new vehicle.

Allowable LTVs may be slightly higher when refinancing a car, and lenders may offer loans with LTVs up to 125% for auto refi loans.

Lenders who allow loans over these limits may be stricter on some other requirements, such as asking for a higher credit score or a lower debt-to-income ratio, to offset some of the perceived risk of a higher LTV.

Why Do Lenders Use the LTV Ratio?

When lenders loan out money, they do so with the expectation that the borrower will pay back the loan. However, inevitably some borrowers will default on their loans, saddling the lender with their outstanding debt.

To protect themselves, lenders may require collateral that they can repossess and sell to recoup some of what the borrower owed if the borrower defaults on the loan.

In the case of auto loans, the vehicle itself typically serves as collateral. One might think the ability to sell the repossessed vehicle would cover the lender’s risk, yet this isn’t necessarily the case.

Cars can depreciate in value quickly, and lenders may not be able to cover all of their losses simply by seizing the car. The LTV ratio helps lenders determine how much risk they’re taking on if the borrower accepts the loan but fails to repay the debt.

Higher LTVs vs Lower LTVs

The higher the LTV, the more risk the lender is taking on, and the more money they might lose if the borrower fails to repay the car loan principal and any interest charges that may apply.

For example, if you have an LTV of 110% and you default on the loan, your lender is only going to be able to recoup 100% of the market value of the car at the time of default. At the very least, the extra 10% loan amount on top of the value of your vehicle represents the risk the lender is taking on.

Lenders typically set maximum LTVs in order to limit the amount of risk they expose themselves to.

What Is the Effect of LTV on Interest Rate?

Because a higher LTV means more risk for lenders, they will do what they can to offset that risk. One tactic they may use is charging higher finance charges on your loan. These higher rates mean a larger monthly payment for you, and you’ll pay more for your car over the life of the loan.

Making a larger down payment on a car can minimize your LTV ratio and reduce risk to the lender. You can negotiate for a lower interest rate, and lenders may offer a better rate if you secure a lower LTV.

The potential effect of LTV on interest rates is that lenders may offer a lower annual percentage rate (APR) on a car loan if you reduce your LTV with a larger down payment.

The Takeaway

LTV is an important metric that helps lenders assess their willingness to offer you a loan. But it’s also an important number for you to keep in mind to help ensure you receive the loan that works best for you.

A lower LTV can reduce the cost of refinancing and make it more likely that you’ll be offered a loan that you can afford.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What is an LTV ratio?

The LTV ratio is a metric that allows lenders to compare the amount of a collateralized loan to the value of the asset that secures the loan.

Why is the LTV ratio important?

The LTV ratio helps lenders determine how much risk they’re taking on—the higher the ratio, the greater the risk.

How do you calculate the LTV ratio for your car?

You can calculate LTV for your car with this simple formula: LTV = (Loan amount/appraised value of asset) x 100. The result is expressed as a percentage.

How do lenders use the LTV ratio?

Lenders look at the LTV ratio to help them determine how much risk they would be taking on if they offered you a secured loan product. They might offset some of that risk by requiring you to have a higher credit score, asking you to make a down payment, or by offering you higher interest rates.

Photo credit: iStock/sonmez

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-003

If you’re struggling to keep up with student loan payments, rest assured you are not alone.

There are many reasons why you may be having difficulty with your loans. Some students may struggle to find a job after graduation or some may not earn as much as they anticipated right out of the gate. For those with federal student loans, forbearance and deferment options exist for these very reasons. Here’s a closer look at the details, along with the changes to deferment and forbearance that will take effect for loans issued after July 1, 2027.

When Student Loan Payments Become Too Much

When monthly student loan payments become insurmountable, the worst thing to do is nothing at all. When a borrower stops paying their student loans, they may go into default. This has the potential to devastate an individual’s credit score.

In default, borrowers could also face relentless collection agencies or could even have their wages garnished. Plus, in most cases, student loans can’t be discharged even if the borrower files for bankruptcy.

Borrowers with federal student loans may have other options for pausing or temporarily reducing their monthly payments if they’ve found themselves in a tough financial spot. Namely, borrowers can apply for either student loan deferment or forbearance from the federal government in order to avoid default.

It can be tough to figure out the difference between these two programs and which is best for your situation. Here’s a breakdown of the differences between student loan deferment and forbearance.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands by lowering your interest rate. Note that you may pay more in interest if you refinance with an extended term. Refinancing federal loans also means losing access to federal repayment plans and other programs.

What Is the Difference Between Deferment and Forbearance?

Let’s start with the similarities: Both deferment and forbearance allow a borrower to temporarily lower or stop making payments on their federal student loans for a defined period of time, if they qualify. In both cases, the borrower needs to contact their loan servicer, submit a request, and provide the documentation requested by the loan servicer.

The main difference between the two is that, while in deferment, borrowers are not required to pay the interest that accrues if they have a qualifying loan.

Specifically, interest is not owed on Direct Subsidized Loans, Subsidized Federal Stafford Loans, Federal Perkins Loans, and subsidized portions of Direct Consolidation Loans or Federal Family Education Loan Program (FFEL) Consolidation Loans.

Interest payments are still required on Direct Unsubsidized Loans, Unsubsidized Federal Stafford Loans, Direct PLUS Loans, FFEL Plus Loans, and unsubsidized portions of Direct Consolidation Loans and FFEL Consolidation Loans.

With federal student loan forbearance, borrowers are always responsible for paying the interest that accrues, regardless of what kinds of federal loans they have.

You can either pay the interest as it adds up during the forbearance period, or you can have it added to your balance at the end.

Who Is Eligible for Deferment?

Deferment is tailored to people who are facing financial difficulties. Loans can be deferred for up to three years.
To qualify, you need to be enrolled in school at least half-time, in the military, in another eligible post-graduate role, or unable to find a full-time job. You may also qualify for a deferment if you’re seeking cancer treatments, are enrolled in an approved rehabilitation program, or are serving in the Peace Corps.

If a borrower is enrolled in an approved graduate program, they may be able to defer their loans for an additional six months after school ends.

However, deferment options will be limited for future borrowers. Due to the recent U.S. domestic spending bill, deferment for economic hardship and unemployment will no longer be available for federal student loans issued after July 1, 2027.

Recommended: Examining How Student Loan Deferment Works

Who Is Eligible for Forbearance?

The two types of forbearance are mandatory and general. Mandatory forbearance must be granted if you qualify, while general forbearance is up to your loan servicer to approve you or not.

Mandatory Forbearance

Loan servicers are required to grant mandatory forbearance to qualifying borrowers. Depending on the type of federal student loan, borrowers may be eligible if they are in a medical or dental internship or residency, serving in AmeriCorps or the National Guard, or working as a teacher and performing a teaching service that qualifies for teacher loan forgiveness.

Borrowers may also qualify if their monthly student loan payment is at least 20% of their gross monthly income. Again, this will depend on the type of loan they have. Note: Mandatory forbearance is granted for up to a year at a time. If you’re still facing financial challenges when the forbearance period ends, you can request another, up to a cumulative total of three years.

For loans issued after July 1, 2027, forbearance will be capped at nine months in any 24-month period.

General Forbearance

With general forbearance, it’s up to the loan servicer to decide whether to grant it, and only certain federal student loans are eligible (Direct Loans, FFEL, and Perkins Loans). Like mandatory forbearance, general forbearance can only be granted for 12 months at a time. There is a three-year cumulative limit on general forbearances. As mentioned above, loans issued after July 1, 2027 will have a different limit: no more than nine months of forbearance in a 24-month period.

Borrowers can apply for a general forbearance if they’re unable to make loan payments because of financial hardship, medical bills, or changes in their job (such as reduced pay or unemployment). If there are other reasons they’re unable to pay, it’s also possible to make that case to the loan servicer, but the decision will be theirs to make.

Forbearance vs. Deferment for Student Loans: Which Option to Choose?

If your federal student loan type and circumstances allow you to, it’s best to apply for deferment since it allows you to get a break on interest during the deferment period. However, if you’ve already exhausted the maximum time for a deferment or your situation doesn’t fit the narrow eligibility criteria, then it could make sense to apply for a forbearance.

If your ability to afford your loan payments is unlikely to change anytime soon, or if you have private loans and/or federal loans that don’t qualify for a deferment or forbearance program, you may want to consider other solutions, such as an income-driven repayment plan or student loan refinancing.

How Does an Income-Driven Repayment Plan Work?

Another way to potentially reduce your federal student loan payment is to apply for an income-driven repayment plan. The government offers three different income-driven plans, which cap the borrower’s monthly payments at a percentage of their discretionary income.

The plan a borrower qualifies for depends on the type of loan they have and when it was borrowed. Depending on the plan, your monthly payment will generally be reduced to 10-20% of your discretionary income. The repayment term is also extended up to 25 years.

If you still have a balance once the repayment period is up on the Income-Based Repayment plan (IBR), the remaining debt is forgiven. You may get credit for your payments on PAYE and ICR if you switch to IBR. However, you may have to pay taxes on the canceled debt.

Starting in the summer of 2026, borrowers will have a new income-driven option, the Repayment Assistance Plan (RAP). This will be the only income-driven plan available to those who take out loans after July 1, 2026. The PAYE and ICR programs will also be eliminated in the coming years.

How Can Student Loan Refinancing Help?

For some borrowers, refinancing student loans can be an option that helps them reduce their monthly payment or lower their interest rate. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.) Refinancing involves taking out a new loan from a private lender and using it to pay off existing federal or private loans, effectively combining multiple loans into one.

The new loan will have a new term and interest rate, which has the potential to help borrowers save on interest or the amount they pay over the life of the loan. Borrowers with a solid credit score and employment history (among other positive financial indicators) are especially likely to be able to qualify for favorable terms.

Keep in mind that if you refinance federal loans, you will no longer qualify for the federal benefits we discussed in this post, including deferment, forbearance, or income-driven repayment programs. Make sure to weigh the pros and cons of refinancing carefully before moving forward.

However, some private lenders do offer temporary relief if you experience financial hardship. Rather than stopgaps that can require you to reapply year after year, refinancing can help you gain a long-term plan for getting your payments under control.

With SoFi, it’s possible to refinance loans without paying any hidden fees or penalties at either a fixed or variable interest rate.

The Takeaway

Deferment and forbearance are both options that allow borrowers to temporarily pause payments on their federal student loans.

Deferment differs from forbearance in that some borrowers may not be required to pay interest that accrues during deferment, depending on the type of loan they have. With forbearance, borrowers are generally required to cover interest that accrues while the loan is in forbearance.

Borrowers who anticipate having trouble making monthly federal student loan payments in the long-term might consider applying for income-driven repayment, which ties monthly payments to the borrower’s income level.

If you’re comfortable sacrificing federal programs and repayment plans, refinancing your student loans with a private lender could also lead to savings. Refinancing with an extended term, though, could increase your long-term interest costs.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.