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Study: Good credit could save you thousands on a car

Posted August 30
Updated September 1

— You could save more than $6,000 on your next car purchase because of your credit score

A new study reveals that credit score has a much bigger impact than many people realize on the interest you pay on car loans.

The most important way to save when you finance a car is to make sure your credit score is top notch.

Compared to an excellent credit score, WalletHub's latest car financing report found buyers with only fair credit will spend an extra $6,282 in interest over the life of a five-year, $20,000 financing loan. That amounts to around five times more than a person with excellent credit.

The report also shows the average loan interest rate for a new car is 16 percent less than the average used car loan.

WalletHub advises financing with the car manufacturer or at a credit union for the best rates, but it is very important to shop around.

Consumer Reports says to get the best deal on a car loan, put as much time into researching your loan as the car itself.

Now is the time buy a car, if you're in the market for a new vehicle. Cars are sitting longer in dealers' lots than at any time since 2009, so there are deals.

3 Comments

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  • Steve Faulkner Sep 6, 3:22 p.m.
    user avatar

    I'll save that $500/month (average) payment for a while and pay cash for used car and save many THOUSANDS of dollars. Credit score is completely irrelevant in this scenario.

  • Betty Harmon Aug 31, 9:42 a.m.
    user avatar

    With a 848 FICO score and an 868 out of 900 for the auto credit score, I was DENIED an auto loan from the bank that I have been using for over 10 years. Why, not enough revolving credit, or no monthly installment payments - apparently a mortgage doesn't apply - or any other stupid reason. I figured out that I wasn't worth their time with the low interest rate and a history of paying loans off early. Thanks First Citizens. I'm leaving you.

  • Rodney Hill Aug 30, 8:16 p.m.
    user avatar

    Do we really need a study to tell us this? What's next..."studies reveal that the sky is blue"?