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.
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.
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:
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:
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:
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.
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.
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.
If you want to get a loan for a Mercedes Benz, you have a few options:
There are pros and cons to each option:
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:
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.
If you want to apply for a loan through a different lender, here are the steps you'll want to take:
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.
Auto loans are usually a better choice than personal loans when it comes to financing a car.
This is because:
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:
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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:
All that being said, there are some situations where you might actually get a better deal securing financing through a dealership.
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.
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.
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.