The Monthly Cost Difference Between Good and Excellent Credit

Good credit gets you approved on reasonable terms. Excellent credit gets you the best terms a lender offers. The difference between those two tiers shows up directly in the complete monthly cost of a car, and it is larger than many buyers assume, because it affects more than just the loan.

The Rate Gap

Lenders reserve their lowest advertised rates for excellent-credit borrowers. A good-credit buyer pays a somewhat higher rate, which raises the loan portion of the complete monthly cost. On a typical auto loan, the gap between a good-credit rate and an excellent-credit rate adds up over the life of the loan.

The Insurance Gap

In most states, the same credit strength that earns a better loan rate also tends to earn a lower insurance premium, since insurers use credit-based insurance scores. So an excellent-credit buyer often pays less in two of the largest complete-monthly-cost line items at once.

Whether to Wait

If you are close to the excellent tier, a short delay to improve your score can change the complete monthly cost on every car you consider. If you are solidly in good-credit territory and need a vehicle now, knowing the gap at least lets you shop with clear eyes and prioritize vehicles with lower insurance and maintenance to offset the rate.

Know which tier your score falls in before shopping.
Compare the complete monthly cost at your tier versus the next tier up.
If close to excellent, consider a short delay to improve your score.
If staying in good credit, offset the rate by choosing lower-cost-to-own vehicles.

CarCostCX shows the complete monthly cost for your credit tier on every listing, so the difference between good and excellent credit is visible before you commit.

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Frequently Asked Questions

What is the difference between good and excellent credit for a car loan?

Excellent credit earns the lowest available rates, while good credit earns a slightly higher rate. In most states, excellent credit also tends to lower insurance premiums, so the complete monthly cost differs in two places.

Is it worth waiting to improve credit before buying a car?

If you are close to the next tier, a short delay to raise your score can lower both your loan rate and, in most states, your insurance, reducing the complete monthly cost on every vehicle.

What credit score is considered excellent?

Lenders vary, but scores in the mid-700s and above are generally treated as excellent and qualify for the best advertised rates.