Mercedes Benz Credit Score Requirements: How to Get a Mercedes Car Loan

Mercedes Benz is one of the most aspirational auto brands out there-- when you own a Mercedes, it's a sign that you've made it in life.

Only the most affluent of car owners, though, can afford the steep price for these vehicles out of pocket.

If you are planning on financing a Mercedes-Benz through their own lending service, you will need a credit score of at least 680. However, you can also obtain a loan from another lender or take out a personal loan, which can allow you to receive financing with a lower credit score.

Of course, your credit score and credit report will have an impact on the loan terms you are offered. In order to qualify for a traditional auto loan, you typically need a credit score of at least 600. If your credit score is lower than 600, it's possible to locate a bad credit car loan with much less favorable rates and terms.

What Credit Score Is Needed to Buy a Car?

There is no standard minimum credit score that you will need in order to apply for a car loan. That being said, each lender will have their own minimum standards that they will apply when they review auto loan applications.

• In general, you will be charged more interest on your loan the lower your credit score. You will typically need to have at least prime credit in order to get a good interest rate on an auto loan. A credit score of 661 or up is considered prime credit in some credit scoring models, while 680 and up is favorable for others.

There are two primary factors that will inform the minimum credit score you need in order to qualify for a car loan:

1. The lender through which you are applying for a car loan
2. The type of car you are trying to finance

If a lender advertises a minimum credit score, it doesn't necessarily mean you're out of luck if your credit score is below the listed number. The following conditions might allow you to receive an auto loan from a lender even if your score doesn't meet their minimum:

• You are a current customer of the lender, or
• You are otherwise able to prove that you are not a high-risk borrower

There are a number of factors that will be taken into account beyond your credit score when you apply for a car loan. In order to determine whether you will be approved and what interest rate you will be offered, lenders will likely evaluate the following:

• Your employment history
• Your income
• Your debt-to-income ratio

Though several factors are taken into account when determining whether or not you will be approved for a car loan, your credit score is one of the major factors.

What Credit Score Is Needed to Buy a Mercedes Benz?

The minimum credit score required for buying a Mercedes Benz with financing is going to depend on the lender that you use. We will go into details about financing using Mercedes-Benz Financial Services a bit later on in the article, but first, let's discuss what you need to know about getting a car loan from any lender for a Benz.

The average cost of a new Mercedes-Benz reached $76,590 in 2022, which is a 43% increase over the average for 2019. This increase has aligned with rising car prices as well as the carmaker's push to focus on top-end models in recent years.

The average cost of a new Mercedes is more than $76,000.

There is no set minimum credit score for purchasing a Mercedes Benz or any particular type of car, for that matter. However, the better your credit score is, the more likely you will be approved and receive favorable terms for an auto loan. This is particularly important when you are buying a car as pricey as the average Mercedes, as higher interest rates will mean paying thousands of dollars than you would if you received the lowest possible interest rates.

You will typically need at least a credit score of 600 to qualify for a traditional car loan, and a score of 661 or higher (sometimes 680 depending on the credit scoring model used) will help you secure a low interest rate.

Understanding How Your Credit Score Will Impact the Total Interest You Pay on a Mercedes Car Loan

For example, let's say that you are buying a brand-new Mercedes at the cost of $76,590. You are a prime borrower and therefore receive a low-interest rate of 4.03% for a 48-month loan. You put down 20% as a down payment, which amounts to $15,318.

Not factoring in the cost of sales tax, title, registration, and other fees, this would mean that you would be making monthly payments of $1,384.29 for 48 months. The total interest you would pay over the life of the loan is $5,173.75, meaning that your total cost, including interest, would be $81,763.75.

Receiving financing with a less than ideal credit score can mean that you pay thousands or tens-of-thousands of dollars extra in interest over the life of a loan.

Keeping all of the factors equal except for your credit score, let's now say that you are a non-prime borrower that receives an auto loan interest rate of 6.57%.

In this scenario, your payments would be $1,455.04, and you would pay $8,570 in interest over the life of the loan. The total cost, including interest, for the car would be $85,160.

Finally, let's look at the same example if you were a deep subprime borrower. You receive an interest rate of 12.84%, meaning that your monthly payments amount to $1,638.91. Over the life of the loan, you pay a whopping $17,395.81 in interest for a total cost of $93,985.81.

As you can see, there is a tremendous difference between the amount of interest you pay over the life of the loan depending on your credit score. For this reason, it's worth working to improve your credit score, if possible, before applying for an auto loan.

Has your credit report seen better days? This article looks at four simple ways to remove derogatory marks on your credit.

How to Get a Mercedes Benz Car Loan

If you want to get a loan for a Mercedes Benz, you have a few options:

• Obtaining financing through Mercedes-Benz Financial Services
• Obtaining financing through another lender for a secured auto loan
• Obtaining financing through an unsecured personal loan

There are pros and cons to each option:

• Mercedes-Benz Financial Services: This is one of the fastest and easiest options, but the interest rates can be higher than with other secured auto loan lenders.
• Another lender for a secured auto loan: This will take some shopping around and makes the process a little more complicated and time-consuming, but you will likely be able to secure better rates and terms.
• Unsecured personal loan: You won't have to use your new car as collateral for the loan, but the rates will be significantly higher.

Is there a tradeline on your credit report with the acronym COAF? This stands for Capital One Auto Finance, and you can learn more about how this impacts your score and report in this article.

Applying Through Mercedes-Benz Financial Services

Receiving financing from Mercedes-Benz Financial Services typically means that you need a credit score of at least 680. If your credit score is below this, you will probably want to shop around for different lenders with less strict credit score minimums.

It's pretty easy to apply for a loan through Mercedes-Benz Financial Services. Here are the steps you'll want to take:

1. Go to the Mercedes-Benz Financial Services website and navigate to "Credit Application" under their menu drop-down.
2. Select if you are applying for the loan as an individual or as a business, and then select whether you are applying alone or with a co-applicant.
3. Read the terms of use and privacy notice and accept them.
4. Select the vehicle you desire, including the year, class, and model.
5. Choose the financing you're looking for-- loan, balloon loan, or lease-- and enter your desired down payment and loan term. If applicable, you'll also enter the value of your trade-in here.
6. Choose the authorized dealership you want to purchase or lease a vehicle from.
7. Enter your personal information, including your address, employment status, monthly income, and Social Security number.
8. Review and submit your application after reading any state disclosures that are relevant to your loan.

If you want to get an auto loan through Mercedes-Benz Financial Services, you will need a credit score of at least 680 in order to receive favorable loan rates and terms.

Applying Through a Different Lender

If you want to apply for a loan through a different lender, here are the steps you'll want to take:

1. Review your credit report for errors or incorrect information before applying and dispute them if necessary.
2. Research a number of different lenders, including large national banks, online lenders, local banks, or credit unions.
3. Compare quotes and create a shortlist of the best options.
4. Apply for pre-approval from your shortlist of lenders.
5. Use your offers to help set your budget.
6. Search for a Mercedes-Benz that you can afford according to the preapprovals you received. Make sure you check your loan offer for excluded brands, dealership requirements, lender requirements, and time restrictions.
7. Select and finalize your loan using the lender's instructions. They will be able to inform you as to how to proceed from here.
8. Once you have your loan, make your payments on time.

Are you on a mission to improve your credit so you can buy the car of your dreams? Check out our posts about credit repair hacks to increase your credit score, bank overdrafts and credit scores, repairing credit after identity theft, and removing charge-offs from your credit report.

Applying For an Unsecured Personal Loan

Auto loans are usually a better choice than personal loans when it comes to financing a car.

This is because:

• You'll probably get a better interest rate
• You probably won't be required to pay additional loan fees
• It's typically easier to qualify for an auto loan

That being said, you might have your reasons for wanting to apply for a personal loan to purchase a Benz.

To apply for a personal loan, you'll want to:

1. Check your credit report and score.
2. Shop around with traditional banks, online lenders, and credit unions for the best rates, given your credit report and score.
3. Pick a short list of lenders and apply for preapproval.
4. Provide all of the necessary documentation.
5. Accept the loan and use it to purchase your new car.
6. Make your payments on time.

Did you overdraw your bank account and you're worried it's going to impact your credit score? Check out our post about overdrafts and your credit.

Should You Use Dealer Financing When Buying a Car?

It can be very convenient to receive financing through a dealership when you're buying a car, but it isn't always the best deal. There are other lenders you can use to purchase a Mercedes-Benz, and you will typically receive more favorable rates and terms from a bank, credit union, or online lender.

There are a number of reasons why you might choose to look elsewhere for financing, including:

1. Save time: No one enjoys spending hours at the dealership, and showing up already preapproved for a car loan can save you quite a bit of time.
2. Be a more effective negotiator: You might be able to negotiate a lower interest rate through the dealership when you are already preapproved, and you'll have more leverage to get the best price on the vehicle you want.
3. Receive better interest rates: Dealers will often have higher interest rates than banks, credit unions, and online lenders. Most lenders will let you check your rates before doing a hard inquiry into your credit report, too, which means you can find out what rates you qualify for without damaging your score.

All that being said, there are some situations where you might actually get a better deal securing financing through a dealership.

These include:

• The dealership is willing to match or even beat the loan offer you received elsewhere
• The dealership is running a promotional offer when you finance in-house, with rates as low as 0% APR
• The dealership is the only place you're able to get approved for a loan because of a subprime credit score

It's generally a good idea to shop around for a car loan before you head over to the dealership. More information is always better, and it will give you a sense of whether the financing the dealership is offering is competitive.

Managing Your Credit Score Can Help You Achieve Your Dreams

No one likes spending their free time figuring out how to boost their credit score or clean up their credit report, but the truth is that improving your credit can help you achieve your dreams in life.

If you've always wanted a Mercedes-Benz, you're going to need to be approved for a substantial car loan.

• The better your credit score is and the more impressive your credit report, the more likely you'll receive approval as well as favorable loan rates and terms.

Are you ready to improve your credit and purchase the Benz you've always wanted? If so, make sure you check out our Credit Building Tips blog, with tons of resources and articles about credit health.

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