Let’s talk about how credit affects buying a car—and break it down super simple. Whether your credit is good or bad, you can still buy a car. But the money part? That’s where things change a lot.
🧠 First, What Is Credit?
Credit is like your money report card. It tells banks how good you are at paying back money.
You get a score between 300 and 850.
- Good Credit = 700+
- Okay Credit = 600–699
- Poor Credit = below 600
🚙 Let’s Say You’re Buying a Car for $25,000
Both Person A (Good Credit) and Person B (Poor Credit) want to buy the same exact car.
They both:
- Put down $2,000 as a down payment
- Need to borrow $23,000
- Choose a 5-year (60-month) loan
📊 Now Look at the Numbers
| Person | Credit Score | Interest Rate (APR) | Monthly Payment | Total Paid After 5 Years |
|---|---|---|---|---|
| A (Good Credit) | 740 | 5% | $434 | $26,040 |
| B (Poor Credit) | 580 | 17% | $570 | $34,200 |
😳 That’s a difference of $140 per month and a total of $8,160 more just because of bad credit.
💡 Why the Big Difference?
Banks trust people with good credit more. So they charge less interest (extra money you pay to borrow). Poor credit means higher risk to the bank, so they charge more to protect themselves.
🔑 What Can You Do?
- Build Credit First: Pay your bills on time, use credit cards wisely.
- Save a Bigger Down Payment: Less borrowed = less interest.
- Shop Around: Some lenders offer better deals even if your credit isn’t perfect.
- Don’t Rush: Fixing your credit could save you thousands.
🚨 Real Talk
Having bad credit doesn’t mean you’re stuck—but it does cost more.
Want lower payments and less stress?
Get your credit right before the keys hit your hand. 🔑