# FICO Score Range

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FICO and Buying a Car Worksheet
(or How Your FICO Score Affects How Much You Pay For a Car)

FICO       720-850    700-719     660-689      625-659    590-624      500-589
Score
Range
4-Year
Auto Loan 7.2%           7.9%        9.8%         11.8%      15.2%        16.6%
Interest
Rate
As you can see from the above table, the higher the FICO score the lower the interest rate.
Remember, credit is not free. The cost of borrowing money is called interest, and is usually
stated as a percentage of the loan.

Low interest rate = lower monthly payment on your car loan. For example:

Problem One Jesse wants to buy a new car that costs \$20,000. He does not have that
much cash so he applies for a car loan. He wants to borrow the money for 4 years and
make monthly payments. How much interest he has to pay each month will be based
on what his FICO score is, which then determines what his monthly payment will be.

1)     Read the table below to find out how much that \$20,000 car will cost Jesse if he
gets a 4-year loan. Then fill in the last two blank spaces on the chart by calculating the
actual cost.

FICO               Interest Rate   Monthly          Total Interest   Actual Cost of
Score              (APR)           Payment          Paid             Buying Car
720-850            7.2%            \$481             \$3,080           \$23,080
690-719            7.9%            \$488             \$3,413           \$23,413
660-689            9.8%            \$505             \$4,241           \$24,241
625-659            11.8%           \$525             \$5,194           \$25,194
590-624            15.2%           \$559             \$6,832           \$26,832
500-589            16.5%           \$572             \$7,458           \$27,458

2)   If Jesse’s FICO score is 530 what will his monthly payment
be? \$572
3) How much interest will Jesse pay over the life (48 months or 4 years) of his
1
loan? \$7,458
4)   If Jesse’s FICO score is 695 what will his monthly payment
be?_\$488

5) Assuming Jesse’s FICO score is in the BEST range, how much money could Jesse
save on the total price of his car compared to a buyer in the WORST range?
\$4,378

Problem Two Since Jesse is young and has little credit history his score is in the low
range. He decides that the monthly payment is too high for his budget. Jesse then tries
to lower his monthly payment by asking for a longer loan. He then asks to borrow the
\$20,000 for 60 months, a five-year loan.
1) Read the table below and fill in the blank spaces with the actual cost of the car with
a 5-year loan.

FICO             Interest Rate    Monthly          Total Interest   Actual Cost of
Score            (APR)            Payment          Paid             Buying Car
720-850          7.2%             \$398             \$3,891           \$23,891
690-719          7.9%             \$405             \$4,311           \$24,311
660-689          9.8%             \$423             \$5,359           \$25,359
625-659          11.8%            \$443             \$6,605           \$26,605
590-624          15.2%            \$479             \$8,735           \$28,735
500-589          16.5%            \$492             \$9,515           \$29,515

1) If Jesse’s FICO score is 530 what will his monthly payment
be? \$492

2)   Did getting a longer loan lower Jesse’s monthly payment? Yes

3)   Did getting a longer loan change Jesse’s interest? Yes

How did it change? You pay more interest over a longer loan period.

4) What happened to the actual cost of buying the car?

Actual cost is higher, because of the longer loan period.

2

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