What Credit Score Do You Need for a Car Loan? 2026 Ranges

What credit score do I need for a car loan?

There is no single number that guarantees approval. Most lenders prefer a score of 600 or above, but the credit score needed for car loan approval depends on the lender, the vehicle, and your broader financial picture. Lower scores can still qualify - more on that below.

Understanding credit scores

A credit score is a number, typically ranging from 0 to 1,000 in New Zealand, that summarises your credit history. It draws on data held by credit bureaus - things like whether you pay bills on time, how much debt you carry, and how often you apply for new credit. Lenders use it as a quick indicator of repayment risk, but it is one input among many, not the whole story. If you want a deeper look at how the system works, how credit scores work in NZ covers the mechanics in full.

A higher score signals lower risk to a lender, which generally means better interest rates and a smoother approval process. A lower score does not automatically mean rejection - it means lenders look harder at the rest of your application.

Credit score ranges and what they mean for car loans

New Zealand credit bureaus like Equifax and illion each use their own scoring bands. The general categories below give a practical sense of where you stand:

• Excellent (800-1,000): Strong approval odds across most lenders. You are likely to access the most competitive interest rates available.
• Good (700-799): Well-regarded by mainstream lenders. Approval is common and rates are generally favourable.
• Fair (500-699): Some mainstream lenders may hesitate, but specialist and non-bank lenders often work within this range. Rates may be higher to reflect the perceived risk.
• Poor (below 500): Mainstream bank approval is unlikely, but specialist lenders exist for this range. Expect higher rates and potentially stricter loan conditions.

According to Kelley Blue Book, the average credit score for financing a new car was 757 in Q2 2025, and 690 for used car financing. While those figures reflect the US market, they give a useful benchmark: borrowers with good-to-excellent scores dominate new car finance, while used car buyers span a wider range.

Average credit score for a car loan: what the data shows

The average credit score for a car loan sits comfortably in the "good" band for new vehicles, and somewhat lower for used cars. This reflects a straightforward pattern: new cars cost more, so lenders apply tighter criteria. Vehicle loans for new and used cars differ in more ways than just the sticker price - lender criteria, loan terms, and the vehicles accepted as security can all vary. Used car loans, being smaller on average, attract a broader pool of borrowers including those with mid-range scores.

What this means practically: if your score is around 650-700, you are not an outlier. You are in the range where many car loans are written - particularly for used vehicles. The question is less "am I eligible?" and more "which lenders are the right fit, and what will the rate be?"

Loan approval factors beyond your credit score

Credit score is a starting point, not a finish line. Lenders assess a range of factors when deciding whether to approve a car loan and on what terms. Understanding these helps you see where you can strengthen your application.

Income and employment

Lenders want to know you can afford the repayments. Stable, verifiable income - whether PAYE employment or self-employment with clear records - carries significant weight. Irregular income is not disqualifying, but it requires more documentation.

Existing debt levels

Your total debt relative to your income (sometimes called your debt-to-income ratio) matters. A borrower with a modest credit score but low existing debt may be viewed more favourably than one with a higher score but already stretched repayments.

Repayment history and conduct

Recent behaviour matters more than old mistakes. A default from four years ago carries less weight than a missed payment last month. Lenders look at the nature, age, and value of any defaults or arrears, and they pay close attention to your conduct over the past six to twelve months.

Credit enquiry activity

Every time you apply for credit, a hard enquiry is recorded on your file. Multiple enquiries in a short period can signal financial stress, which makes lenders cautious. This is worth knowing before you start shopping around.

The vehicle as security

For a secured car loan, the vehicle itself is collateral. Lenders consider its age, value, and condition. An older vehicle with high kilometres may be accepted by some lenders but not others, regardless of your credit score.

Options for bad credit car loans

A low credit score does not close the door on car finance. It shifts the conversation toward specialist lenders who are set up to assess applications differently.

Specialist and non-bank lenders look at your full financial picture rather than applying a hard score cutoff. They weigh factors like your current income, recent repayment behaviour, and the loan-to-value ratio of the vehicle. The trade-off is that interest rates are higher - reflecting the additional risk the lender takes on.

A few practical pathways worth knowing about:

• Specialist lenders: Non-bank lenders often have more flexible criteria than the major banks. They are more likely to consider applicants with defaults, thin credit files, or non-standard income.
• Larger deposit: Putting more money down reduces the lender's exposure. This can tip a borderline application into approval territory, and sometimes into a better rate.
• Co-borrower or guarantor: Adding a co-borrower with a stronger credit profile can improve approval odds. Both parties are legally responsible for the loan, so this is a decision that needs careful thought.
• Secured loan: Offering the vehicle - or another asset - as security gives the lender a fallback, which can make approval more likely for borrowers with lower scores.

According to CFPB data, approximately 50,000 new auto loans were opened by borrowers with scores below 580 in October 2025 - confirming that subprime car finance is a real and active market, not a theoretical option.

How Nomu Finance approaches credit assessment

Nomu Finance assesses applications based on overall credit profile rather than credit score alone. Factors considered include the nature, value and age of any defaults or arrears, recent repayment conduct, current debt levels, credit enquiry activity, affordability, income and employment stability, and available security.

This matters because a low score may be eligible with some lenders on Nomu's panel, while an applicant with a higher score may not qualify due to other aspects of their credit profile or affordability. The score is a signal, not a verdict.

Nomu Finance provides access to a panel of lenders including Nectar, Finance Now, and MTF, giving borrowers visibility into who may fund their loan. Applications are matched to suitable lenders based on the full credit profile - not just the number on a bureau report. If you are thinking about what you might be able to borrow, how much you can borrow for a car loan walks through the key factors lenders use to set that number.

How to improve your credit score before applying

If your score is lower than you would like, there are concrete steps you can take. The timeline varies - some changes show up within weeks, others take several months - but the direction is always within your control.

Pay on time, consistently

Payment history is the single biggest driver of your credit score. Setting up automatic payments for bills, loans, and credit cards removes the risk of accidental late payments. Even a few months of clean repayment history can shift your score meaningfully.

Reduce existing debt

Paying down credit card balances and other revolving debt lowers your credit utilisation, which improves your score. Focus on high-utilisation accounts first.

Avoid unnecessary credit applications

Each hard enquiry dents your score slightly. In the months before applying for a car loan, hold off on applying for other credit unless it is essential.

Check your credit report for errors

Errors on credit reports are more common than most people expect. Incorrect defaults, accounts that belong to someone else, or outdated information can all drag your score down unfairly. You are entitled to a free copy of your credit report from New Zealand's main bureaus - Equifax and illion - and disputing errors is straightforward.

Realistic timelines

Small improvements can appear within one to three months of consistent positive behaviour. Recovering from a significant default or a period of financial difficulty typically takes six months to two years, depending on the severity. If you need a car loan sooner, the focus shifts to finding the right lender rather than waiting for your score to improve.

Key takeaways

• Most lenders prefer a score of 600 or above, but there is no universal cutoff.
• Credit score is one factor - income, debt levels, repayment conduct, and the vehicle all matter.
• Options exist for borrowers with lower scores, including specialist lenders, larger deposits, and secured loans.
• Improving your score is achievable with consistent positive behaviour over time.
• If you need finance now, matching with the right lender for your profile is more productive than waiting.

Ready to find out where you stand? Talk to Nomu Finance about your options - we assess your full credit profile and match you with lenders suited to your situation.