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Car refinancing is a financial tool that allows you to change the terms of your existing auto loan. It can offer benefits such as lowering your monthly car payment and reducing the interest you pay, but it also comes with potential drawbacks, such as added costs and longer loan terms. Below, we’ll explore what car refinancing entails, its advantages and disadvantages, and alternative options to help you make the best choice for your financial situation.

What Is a Car Refinance?

Car refinancing involves replacing your current car loan with a new one, typically from a different lender. You use the new loan to pay off the balance of your existing loan, and you begin repaying the new lender based on updated terms.

The main goal of car refinancing is typically to secure better loan terms, such as a lower interest rate, reduced monthly payments, or a shorter loan term. But refinancing also comes with costs and risks, so it’s important to weigh the benefits and drawbacks carefully before you jump in.

Pros of Refinancing a Car Loan

Here’s a look at some of the key benefits of refinancing your current auto loan.

You May Reduce Your Rate.

A major pro of refinancing is the potential to secure a lower interest rate. If interest rates have decreased since you took out your original loan or your credit score has improved, refinancing could help you score a better rate and lower the total interest you pay over the loan’s life. Also, if you took out dealer financing and didn’t shop around for a loan when you bought your car, you may be paying a higher rate than necessary. Reducing your interest rate by just two or three percentage points could help you save over the life of your loan.

Recommended: Smarter Ways to Get a Car Loan

You Can Lower Your Monthly Payment.

Refinancing can also decrease your monthly payments, either by lowering your interest rate, extending the loan term, or both. This can free up funds in your budget for other expenses, providing much-needed financial relief. It can also keep you from falling behind on your payments, which can lead to late fees and negatively impact your credit.

Just keep in mind that going with a longer term can also have drawbacks, as it can incur higher overall costs (more on that below).

You Might Be Able to Access Quick Cash.

Some lenders offer cash-out auto refinance loans using your car’s equity (the value of your car minus the amount you owe on it). On top of the new loan that pays off your current one, you receive a lump sum of cash based on your equity. For example, if your car is worth $15,000 and you have $8,000 left on your loan, you might get a refinance loan for $11,000 and take $3,000 in cash. You’ll pay interest on the full $11,000, and cash-out refis come with some risks, so, in general, you should only consider this option for financial emergencies or to pay off high-interest debt.

You Can Change Your Loan Terms.

Refinancing may allow you to switch from a variable interest rate to a fixed rate, offering more stability and predictability. It can also allow you to modify your loan term to better suit your financial circumstances. For example, if your income has increased or your monthly expenses have decreased since you took out the original loan, you might be able to refinance for a shorter term and pay off your loan earlier than you originally planned.

You Can Remove a Cosigner.

If your initial auto loan required a cosigner, refinancing can allow you to remove them once your financial situation improves. This can simplify your financial obligations and release your cosigner from sharing responsibility for your auto loan.

Cons of Refinancing a Car Loan

If you are debating whether to refinance your car loan, you’ll also want to keep these potential downsides in mind.

You Could Pay More in Interest.

If you refinance to a longer loan term to lower your monthly payment, you’ll likely end up paying more in interest over the life of the loan. Even scoring a lower interest rate may not make up for the additional months of interest you’ll pay. While the short-term relief may be helpful, it may not be worth the added cost.

Refinancing Comes With Fees.

Refinancing is generally not free. Your new lender may charge an application or origination fee, and your current lender may charge a penalty for paying off your loan early. In addition, your state may charge a fee to re-register your car or transfer the title after refinancing. These fees can diminish or eliminate the potential savings of refinancing.

You Could End Up Upside Down.

Refinancing to extend the term of your car loan or cash out equity could put you in a position of owing more than what your car is worth. This is known as negative equity or being upside-down on a loan. This can be problematic if you need to sell the car or if it’s totaled in an accident.

For example, if you want to trade in or sell your vehicle, you’ll need to cover the difference between what the buyer/dealer pays and what you owe your lender before you can transfer the title. If your car is totaled, your insurance agency will pay out the value of your vehicle. However, you’ll still owe the full amount of the loan (a higher amount) to your lender.

It Can Impact Your Credit Score.

Refinancing triggers a hard credit inquiry, which will appear on your credit reports and can temporarily lower your credit score. While the impact is usually minor and short-lived, it’s important to consider if you’re planning other financial moves, such as getting a mortgage or personal loans, in the near future.

There Are Limited Savings for Older Loans.

Generally, if you have less than 24 months remaining on your car loan, the potential savings from refinancing may not justify the effort and cost. You typically pay the most interest in the first few years of the loan, which limits the benefit of refinancing toward the end of the repayment period.

Alternatives to Car Refinancing

If refinancing doesn’t align with your financial goals, there are other ways to manage your car-related debt.

Balance-Transfer Credit Card

If your lender allows it, you may be able to transfer your auto debt to a balance-transfer credit card. If you can qualify for a transfer card with a 0% introductory rate and pay off the balance within the promotional timeframe (typically 12 to 21 months), you could save significantly on interest. You might even earn rewards from your new credit card in the process.

However, balance transfers often come with fees, usually 3% to 5% of the transferred amount. And if you fail to pay off the balance before the promotional period ends, the interest rate can jump, potentially costing you more than your original loan. This option generally works best for small loan balances and disciplined borrowers.

Personal Loan

A personal loan can be used for a variety of expenses, including paying off your car loan. These loans often come with fixed interest rates and predictable payment schedules, making them a possible alternative to auto refinancing. Going this route also gives you the option of applying for more than you need to pay off the car loan and using any additional cash you borrow for other expenses.

However, personal loans often have higher interest rates than auto loans, particularly for borrowers with average or below-average credit scores. Before opting for a personal loan, you’ll want to compare rates and calculate whether this approach would save you money compared to your existing loan.

Recommended: Personal Loan Savings Calculator

The Takeaway

Car refinancing can be a smart financial move under the right circumstances, such as securing a lower interest rate or reducing your monthly payments. However, it’s not without potential downsides, including fees, extended loan terms, and the risk of negative equity.

If refinancing doesn’t seem like the best fit for your situation, alternatives such as balance-transfer credit cards or personal loans may offer other ways to manage your car loan or give you more financial flexibility.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What are the advantages of refinancing your car?

Refinancing your car offers several advantages, such as lowering your interest rate, which reduces the total cost of the loan. It can also decrease your monthly payments by extending the loan term, improving your cash flow. In addition, refinancing provides an opportunity to change your loan terms, such as switching from a variable to a fixed interest rate or removing a cosigner from the loan. However, refinancing also comes with costs and risks, so you’ll want to weigh the pros and cons before you proceed.

When should you refinance a car loan?

You might look into refinancing your car loan when interest rates have dropped, your credit score has improved, or you need to lower your monthly payments. Refinancing can also be a good option if you want to adjust your loan terms for more stability, such as moving from a variable to a fixed interest rate. However, it’s important to consider potential fees and ensure that the savings outweigh the costs before you proceed.

How soon can you refinance your car loan after purchase?

You can refinance your car loan as early as a few months after purchase, but it can be a good idea to wait at least six months to a year. This timeframe allows your credit score to recover from any temporary drop (due to the original lender’s hard credit inquiry). It also gives you time to establish consistent payments on the loan and shows potential refinance lenders that you are a responsible borrower. Also, some lenders require six to 12 months of on-time payments to even consider a refinancing application.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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SOPL-Q126-049

While there’s no universally required credit score needed to rent an apartment, having a solid credit score can certainly help your chances of a landlord handing you a set of keys. In general, a landlord will look for a credit score that is at least “good,” which is generally in the range of 670 to 739. However, that can vary by landlord or property manager, as well as the location in which you’re renting.

Read on to learn more about how your credit score can affect renting an apartment — and how you can approach renting if you have a lower credit score.

What Credit Score Do I Need to Rent an Apartment?

Truth is, the answer to what credit score you need to rent an apartment is a bit squishy. In general, you’ll have a better chance of approval if your credit score is at least deemed “good.”

What’s considered good? Credit scores are generally classified as follows per FICO® (keep in mind that different scoring models may vary):

•   Exceptional: 800-850

•   Very good: 740-799

•   Good: 670-739

•   Fair: 580-669

•   Very poor: 300-579

There also are variables that can affect whether your credit score qualifies you to rent an apartment. For example, if you live in a city where there is huge demand for apartments, landlords may give preference to those with higher credit scores.

Can You Get an Apartment if One Person Has Bad Credit?

If one person has bad credit, know that it will likely make it tougher for you to get an apartment. Landlords have a lot of leeway and can follow criteria of their choosing.

Still, it’s not impossible even if it is trickier. One smart strategy in this situation is to put the lease in the name of the person whose credit and income is best. You could also offer to show your income or provide a reference.

What Landlords Look at on Your Credit Report

When your landlord reads your credit report, they will be looking for clues about your financial health and habits.

Of much importance is your debt-to-income ratio. In a nutshell, this is the amount of your monthly pre-tax income that gets spent on debt payments. It’s certainly not news to you that filing for bankruptcy can have a negative impact on one’s credit. A landlord also may be spooked if you have hefty credit card balances.

Your credit history disclosed on your credit report also may include your rental history, since some landlords and rental property managers share your data with the credit bureaus. This can be a plus if you’ve been doing the right thing; if not, this can work against you.

Too many hard inquiries also can raise red flags for a landlord. This is because frequently applying for different types of credit could suggest financial instability, which increases risk in the eyes of lenders — as well as landlords.

How to Rent an Apartment with a Lower Credit Score

Just because your credit score isn’t stellar doesn’t mean you’re resigned to sleeping on a friend’s couch or living with your parents. There are ways to rent an apartment even with a lower credit score.

Pay a Higher Security Deposit

One way to show that your credit history is just history is by offering to make a higher security deposit. Say you are required to pay first and last month’s rent upfront. To sweeten the deal, maybe you tack on a couple additional months of rent.

If you want to instill confidence in your potential new landlord, this might do it. Just make sure you actually have the room in your budget to offer up the cash.

Recommended: What Is The Difference Between Transunion and Equifax?

Get a Cosigner

While getting a cosigner may put a damper on feeling like you’re finally a grownup, it may be worth sucking it up and getting a creditworthy parent or other trusted individual to cosign for your apartment. This can give your landlord peace of mind if someone is willing to pay the rent on your behalf if you’re unable to.

Just keep in mind that your cosigner will be on the hook if you miss a payment, and that cosigners generally must meet even steeper credit score and income requirements.

Play Up Your Income

Maybe your credit score is nothing to brag about, but you’ve worked hard and now have your finances in order, with solid savings and a good income. If you could show that you earn three or four times your rent on a monthly basis, that might divert attention from your lousy credit score. Additionally, if you have a solid stash in your savings account, that can also give your landlord assurance that you have the funds to cover your monthly rent.

Consider Getting a Roommate

Adding a roommate to your lease or rental agreement can increase your creditworthiness and your qualifying income. This is especially the case if you can find a roommate with good credit — and get your landlord to pull their credit first.

Benefits of Good Credit When Renting an Apartment

A landlord needs more than their gut instinct to help them determine who to rent to, which is why a credit score carries a lot of weight when it comes to getting your rental application approved. A good or — better still — an excellent score can give landlords the confidence to consider you for the apartment, especially if all other signals they get when checking on your background indicate they should give you the green light.

Having a solid credit score can help you to snag the apartment you want, and avoid the hassles associated with trying to secure an apartment when your credit isn’t as great, such as getting a roommate or a cosigner. Especially if you live in a city with a competitive rental market, a good credit score can be a serious edge.

How to Monitor Your Credit Score

Ideally, you want to monitor your credit and get a copy of your credit report before you start apartment hunting. It’s important to know where you stand, and if there are any errors, you want to fix them right away.

You can get free weekly credit reports from the three national credit reporting agencies: Equifax, Experian and TransUnion via AnnualCreditReport.com.

While your credit report provides information on your various credit accounts and their balances and your payment history, it does not include your credit score. You can check your credit score by looking at a loan or credit card statement or through an online credit score checker. You can also buy a score directly through credit reporting companies. Even if you might have checked your credit score not that long ago, don’t skip doing so again — your credit score updates every 30 to 45 days.

If your score is low, consider taking steps to improve it before jumping into your apartment search. Actions like paying down credit card balances and making sure you don’t have any more late or missed payments for a stretch can show progress.

Recommended: What Credit Score Is Needed to Buy a Car?

What to Expect in 2025

According to Zillow, a surge in apartment construction in 2024 is finally catching up with demand. As a result, rental affordability is at its best level in four years, and landlords are offering record-high concessions.

But that doesn’t mean housing prices are cheap. Apartment rents have risen 36.1% since the start of the pandemic. As of September 2025, the typical asking rent is $1,979.

The Takeaway

You’ll want to shoot for having a good credit score — generally in the range of 570-739 — to get an apartment. While you may be able to still get an apartment if you don’t have solid credit, it will make it more challenging with the competition you’re likely to face.

If you have the luxury of time, do what’s necessary to improve your score so that when you begin your search, you’ll be an ideal candidate. An online credit monitoring tool can make it easier.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

Photo credit: iStock/MixMedia

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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SORL-Q425-029

There are seven federal tax brackets for the 2025 tax year, ranging from 10% to 37%. As a general rule, the more you earn, the higher your tax rate. And the higher your income and tax rate, the more money you will probably owe the IRS (Internal Revenue Service) in taxes.

How much you’ll pay in federal tax on your 2025 income (due in 2026) will depend on which bracket your income falls in, as well as your tax-filing status and other factors, such as deductions.

When people look at tax charts, however, they often assume that having an income in a particular tax bracket (such as 22%) means that all of your income is taxed at that rate. Actually, tax brackets are “marginal.” This term means that only the part of your income within each range is taxed at the corresponding tax rate.

Read on to learn how to use the 2025 tax chart to figure out how much you owe, plus tips on how to lower your tax bracket.

What Are Tax Brackets?

A tax bracket determines the range of incomes upon which a certain income tax rate is applied. America’s federal government uses a progressive tax system: Filers with lower incomes pay lower tax rates, and those with higher incomes pay higher tax rates.

There are currently seven tax brackets in the U.S. which range from 10% to 37%. However, not all of your income will necessarily be taxed at a single rate. Even if you know the answer to “What is my federal tax bracket?” you are likely to pay multiple rates.

Also note that the income levels have been adjusted in 2025 vs. 2024 to take into account the impact of inflation and other factors. So even if you made the same amount in 2025 as in 2024, you are not necessarily in the same bracket. Similarly, the IRS updated the income tax brackets for 2026, as well, which apply to taxes filed in 2027.

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How Do Tax Brackets Work?

Whether you’re filing taxes for the first time or have been doing so for decades, you may wonder how you know what tax bracket you’re in.

While there are seven basic tax brackets, your income doesn’t necessarily get grouped into one level in which you pay that rate on all of your income. This only happens if your total income is in the lowest possible tax bracket.

Otherwise, the tax system is also graduated in such a way so that taxpayers don’t pay the same rate on every dollar earned. Instead, you pay higher rates on each dollar that exceeds a certain threshold.

•   For example, if your taxable income is $50,000 for 2025, not all of it is taxed at the 22% rate that includes incomes from $48,475 to $103,350 for single filers. Some of your income will be taxed at the lower tax brackets, 10% and 12%. Below, you’ll find a specific example of how this works.

In addition to knowing which tax bracket you’re in, it’s important to be aware of standard deductions that are applied when calculating taxes. (This is separate from common payroll deductions, such as health insurance.) The standard deduction will lower your taxes owed.

For income earned in 2025, the standard deduction is $15,750. for unmarried people and for those who are married, filing separately; $31,500 for those married, filing jointly; $23,625. for heads of household. (There may be tax benefits to marriage beyond your bracket, by the way.)

There are additional deductions that may lower your taxable income, too, such as earmarking certain funds for retirement.

In addition to federal taxes, filers may also need to pay state income tax. The rate you will pay for state tax will depend on the state you live in. Some states also have brackets and a progressive rate. You may also need to pay local/city taxes.

Example of Tax Brackets

According to the 2025 tax brackets (the ones you’ll use when you file in 2026), an unmarried person earning $50,000 would pay:

•   10% on the first $11,925, or $1,192.50

•   12% on the next $36,550 ($48,475 – $11,925 = $36,550), or $4,386

•   22% on the next $1,525 ($50,000 – $48,475 = $1,525), or $335.50

Total federal tax due would be $1,192.50 + $4,386 + $335.50, or $5,914

This doesn’t take into account any deductions. Many Americans take the standard deduction (rather than itemize their deductions).

2025 Tax Brackets

Below are the tax rates for the 2026 filing season. Dollar amounts represent taxable income earned in 2025. Your taxable income is what you get when you take all of the money you’ve earned and subtract all of the tax deductions you’re eligible for.

Not sure of your filing status? This interactive IRS quiz can help you determine the correct status. If you qualify for more than one, it tells you which one will result in the lowest tax bill.

2025 Tax Brackets For Unmarried People

According to the IRS, for tax year 2025, there is a tax rate of:

•   10% for people earning $0 to $11,925

•   12% for people earning $11,926 to $48,475

•   22% for people earning $48,476 to $103,350

•   24% for people earning $103,351 to $197,300

•   32% for people earning $197,301 to $250,525

•   35% for people earning $250,526 to $626,350

•   37% for people earning $626,351 or more

2025 Tax Brackets For Married People Who Are Filing Jointly

Tax rate of:

•   10% for people earning $0 to $23,850

•   12% for people earning $23,851 to $96,950

•   22% for people earning $96,951 to $206,700

•   24% for people earning $206,701 to $394,600

•   32% for people earning $394,601 to $501,050

•   35% for people earning $501,051 to $751,600

•   37% for people earning $751,601 or more

2025 Tax Brackets For Married People Who Are Filing Separately

Tax rate of:

•   10% for people earning $0 to $11,925

•   12% for people earning $11,926 to $48,475

•   22% for people earning $48,476 to $103,350

•   24% for people earning $103,351 to $197,300

•   32% for people earning $197,301 to $250,525

•   35% for people earning $250,526 to $375,800

•   37% for people earning $375,801 or more

2025 Tax Brackets For Heads of Household

Tax rate of:

•   10% for people earning $0 to $17,000

•   12% for people earning $17,001 to $64,850

•   22% for people earning $64,851 to $103,350

•   24% for people earning $103,351 to $197,300

•   32% for people earning $197,301 to $250,500

•   35% for people earning $250,501 to $626,350

•   37% for people earning $626,351 or more

Recommended: How Income Tax Withholding Works

Lowering Your 2025 Tax Bracket

You may be able to lower your income into another bracket (especially if your taxable income falls right on the cut-off points between two brackets) by taking tax deductions.

•   Tax deductions lower how much of your income is subject to taxes. Generally, deductions lower your taxable income by the percentage of your highest federal income tax bracket. So if you fall into the 22% tax bracket, a $1,000 deduction would save you $220.

•   Tax credits, such as the earned income tax credit or child tax credit, can also reduce how you pay Uncle Sam but not by putting you in a lower tax bracket.

Tax credits reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your total tax bill by $1,000.

Many people choose to take the standard deduction, but a tax expert can help you figure out if you’d be better off itemizing deductions, such as your mortgage interest, medical expenses, and state and local taxes.

Whether you take the standard deduction or itemize, here are some additional ways you may be able to lower your tax bracket as you think ahead and prepare for tax season:

•   Delaying income. For example, if you freelance, you might consider waiting to bill for services performed near the end of 2025 until early in 2026.

•   Making contributions to certain tax-advantaged accounts, such as health savings accounts and retirement funds, keeping in mind that there are annual contribution limits.

•   Deducting some of your student loan interest. Depending on your income, you may be able to deduct up to $2,500 in student loan interest paid in 2025.

It can be a good idea to work with an accountant or tax advisor to see if you qualify for these and other ways to lower your tax bracket.

Recommended: 10 Personal Finance Basics

The Takeaway

The government decides how much tax you owe by dividing your taxable income into seven chunks, also known as federal tax brackets, and each chunk gets taxed at the corresponding tax rate, from 10% to 37%.

The benefit of a progressive tax system is that no matter which bracket you’re in, you won’t pay that tax rate on your entire income. If you think you might get hit with a sizable tax bill, you may want to look into changing your paycheck withholdings or, if you’re a freelancer, making quarterly estimated tax payments.

You may also want to start putting some “tax money” aside each month, so you won’t have to scramble to pay any taxes owed when you file in April. A high-yield savings account could be a good option for this purpose.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Has anything changed from 2024 to 2025 tax brackets?

Yes, the IRS has adjusted tax brackets for tax year 2025 to reflect the impact of inflation and other factors.

Has anything changed from 2025 to 2026 tax brackets?

Yes, the IRS reviews and adjusts tax brackets each year, including for tax year 2026 (which is filed in 2027). This is done to help protect taxpayers from an unintentional increase in taxes as a result of inflation.

What is a marginal tax rate?

The marginal tax rate refers to the highest tax bracket that you possibly fall into. However, your effective tax rate averages the taxes you owe on all of your income earned. For this reason, your effective tax rate will likely be lower than your marginal rate.

How do deductions affect your tax bracket?

Deductions lower your taxable income. The more deductions that are taken, the more of your earnings are taxed at reduced brackets.

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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SOBNK-Q425-050

Because a credit score is an important indicator for determining a consumer’s creditworthiness when buying a car, those with excellent credit histories tend to have an easier time borrowing money on favorable terms compared to those with lower credit scores. However, industry data shows that high-risk borrowers remain viable candidates for auto loans. In other words, there is no universally defined credit score needed to buy a car.

Read on to learn how your credit score can affect buying a car, plus some tips for purchasing a car with a lower credit score.

What FICO Score Do Car Dealers Use?

There are a few different scoring models that car dealers may use for determining a customer’s credit score. They may use the FICO® Auto Score, an industry-specific model featuring a score range from 250 to 900. The auto industry also may use VantageScore® 3.0 or 4.0, which has a score range from 300 to 850.

No matter which scoring model is used, a bad credit score falls on the lower end of the range and a good credit score sits on the higher end of the range.

What Is the Minimum Credit Score to Buy A Car?

There may not necessarily be a minimum credit score required to buy a car. Consumers with deep subprime credit scores (300–500) have obtained financing for new and used vehicles in 2025, according to the credit bureau Experian. Although the percentage of borrowers in this category is very low, this indicates that even those with the lowest credit scores still may have access to auto financing.

Average APR by Credit Score Ranges

Consumers from all credit score categories have obtained auto loans in 2025, but car buyers with excellent credit histories tended to secure the lowest annual percentage rate (APR) financing, according to Experian. When assessing what is a good credit score to buy a car, Experian’s data confirms that consumers in the super prime and prime categories obtain the lowest interest rates on average for financing.

Based on June 2025 financing data for new vehicle purchases, here are the average APRs you can expect by credit score range:

•   Deep subprime (300-500): 15.97%

•   Subprime (501-600): 13.38%

•   Near prime (601-660): 9.97%

•   Prime (661-780): 6.78%

•   Super prime (781-850): 5.27%

How to Buy a Car With a Lower Credit Score

Obtaining a loan to purchase a new or used vehicle when you don’t have great credit can be cumbersome, but it’s not impossible. Here are some ways a consumer with poor credit may be able to obtain auto financing:

Make a Large Down Payment

Offering a large down payment on a vehicle purchase may allow car buyers to obtain more reasonable rates and better terms for financing, resulting in more affordable monthly loan payments. By putting more money down at the time of purchase, lenders also may view the loan as less risky, thus increasing your odds of approval.

Get Cosigner Assistance

Buying a car with the assistance of a cosigner is another way to potentially bolster your chance of securing favorable financing. A cosigner agrees to share the responsibility of repaying the loan, effectively promising the lender that if you don’t make the payments they will. If the cosigner is creditworthy, it puts the buyer in a much better position to obtain financing than going it solo.

Consider a Less Expensive Car

Especially if you are buying a car with bad credit, it is important to know how much you can realistically afford to spend — and then stick to that budget, even if the dealer tries to upsell you. Additionally, finding a less costly car will reduce the amount you need to borrow, and it may be easier to get approved for a smaller loan amount than a larger one.

Benefits of Good Credit When Buying a Car

The benefit of a good credit score when buying a vehicle is that you may secure lower interest rates compared to consumers with poor credit. Unless a consumer buys a vehicle outright with cash or receives 0% APR financing, the consumer will eventually face monthly principal and interest payments until they’ve paid off the loan balance in full. Auto financing terms may vary in length, with some maturing at 60 months, 72 months or 84 months.

Car loans with a high APR may cause consumers to pay a long-term premium above and beyond the actual sales price of the vehicle.

How to Monitor Your Credit Score

There are a number of ways you can monitor your credit score for free, including through your credit company or another financial institution where you have an account, as well as through a credit service or credit scoring website.

Contrary to what you may expect, your credit report does not include your credit score, though it does provide valuable information about your credit history and debts, which is why it can still be helpful to read over your credit report before making a major purchase like a car.

Credit scores can fluctuate over time depending upon financial circumstances, and credit score updates occur at least every 45 days. That’s why it’s important to take a look at where your score stands right before you begin the process of car shopping.

Also keep in mind that it’s common for credit inquiries to occur when you’re shopping around to see what auto loan terms you qualify for. While soft inquiries don’t affect your credit score, hard inquiries, such as those that happen when you’re comparing rates for an auto loan, can ding your score. However, most major credit scores will count multiple car loan inquiries made within a certain period of time — typically 14 days — as one inquiry.

What to Expect in 2025

Based on the trends outlined in Experian’s Q2 report for 2025, prime borrowers with good credit in 2025 may continue shifting away from gas-powered vehicles in favor of new electric and hybrid vehicles.

Experian’s research also shows that subprime financing remains low, with less than 6% of new car loans and less than 25% of used car loans in 2025 going to consumers in the subprime risk category. These trends could continue through 2026.

The Takeaway

While it is possible to buy a vehicle with bad credit in 2025, consumers in the subprime or deep subprime risk categories may want to explore ways of improving their credit scores to help secure financing with more favorable terms. As far as what credit score you need to buy a car, any score is potentially sufficient for obtaining financing.

If you want to check your credit or work to improve your score before buying a car, a money tracker app allows you to easily keep track of your credit score.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

Photo credit: iStock/tolgart

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SORL-Q425-028

Putting in a pool can turn your backyard into an oasis for parties, playtime for kids, and weekend relaxation. However, installing an in-ground swimming pool costs $65,909 on average in 2025. This expense can leave many homeowners wondering how to cover the cost of installing a swimming pool.

Fortunately, there are several options for financing a pool, including a cash-out refinance, a home equity loan or credit line, and a personal loan. Read on for a closer look at different types of pool financing and their pros and cons.

Key Points

How to Finance a Swimming Pool

If you don’t have enough money saved to pay upfront for a pool — or even if you do — you might be wondering what types of loans or other options are appropriate for this type of backyard remodel.

There are several pool financing choices available to homeowners — including credit cards, pool company financing, cash-out refinancing, home equity loans, home equity lines of credit, and home improvement loans.

Before you take the plunge into financing a pool, it’s a good idea to consider the pros and cons of each type, including the overall costs of borrowing and whether you might qualify for a particular type of loan. What follows is a guide to four of the most popular pool financing options.

Using a Cash-Out Refinance to Pay for a Pool

If you have significant equity built up in your home, you may want to consider a cash-out refinance. Equity refers to the amount of your home’s value that you’ve actually paid off. Put another way, it’s the difference between your mortgage balance and your home’s current value.

With a cash-out refinance, you replace your existing mortgage with a new mortgage for a larger amount. You receive the overage as cash back, which you can then use to cover virtually any expense, including the installation of a swimming pool.

Pros of a Cash-Out Refinance

A cash-out refinance comes with a number of potential benefits:

•   Access to large loans You may be able to borrow up to 80% of your home’s equity, which could be enough to cover the cost of putting in a pool — and maybe even some extras, like a new barbecue or lounge chairs.

•   A lower rate Borrowers with good or improved credit, or those who bought their home when interest rates were higher, may be able to refinance to a lower interest rate.

•   Potential tax deductions A mortgage interest tax deduction may be available on a cash-out refinance if the money is used for capital improvements on your property. (Consult with a tax professional for more details on how this applies to your situation.)

Cons of a Cash-Out Refinance

There are also some downsides to going the cash refi route, including:

•   Involved application process Borrowers must go through the mortgage application process all over again to get a new loan, which usually means submitting updated information, getting an appraisal, and waiting for approval.

•   Closing costs You may have to pay closing costs, generally from 2% to 6% of the total loan amount. (That’s the old loan plus the lump sum that’s being added.)

•   Foreclosure risk Your mortgage is a secured loan, which means if you can’t make your payments, you could risk foreclosure.

Using a Home Equity Line of Credit to Finance a Pool

Another way you can use your home’s equity to finance a pool is to take out a home equity line of credit (HELOC).

A HELOC is a revolving line of credit that uses your home as collateral. It works much like a credit card in that:

•   The lender gives you a credit limit to draw from, and you only repay what you borrow, plus interest.

•   As you pay back the money you owe, those funds become available to you again for a predetermined “draw” period (usually five to 10 years).

Pros of a HELOC

Here’s why a HELOC can be a popular way to pay for home improvements like adding a pool:

•   Flexibility Instead of borrowing money in one lump sum, a HELOC allows you to tap into the line only as needed. Plus, you only pay interest based on the amount you actually borrow, not the entire amount for which you were approved, as you would with a regular loan.

•   Low rates The interest rates are generally lower than credit cards and unsecured personal loans.

•   Potential tax deductions The interest on HELOC payments might be tax deductible if the funds were used to buy, build, or substantially improve your home, and you itemize your deductions.

Cons of a HELOC

HELOCs also have a few potential drawbacks, which include:

•   Variable interest rates HELOCs generally come with a variable interest rate, which means when interest rates increase, the monthly payments could go up. Although there may be a cap on how much the rate can increase, some borrowers might find it difficult to plan around those fluctuating payments.

•   HELOCs are easy to use — and overuse Some of the same things that can make a HELOC appealing (easy access to cash, lower interest rates, and tax-deductible interest) could lead to overspending if borrowers aren’t disciplined.

•   Foreclosure risk A HELOC is secured by an asset (your house). If you stop making the payments on the HELOC, you could lose your home.

Recommended: Guide to Unsecured Personal Loans

Using a Home Equity Loan for Pool Financing

A home equity loan is yet another way to tap into the money you’ve already put into your home. But unlike a HELOC, borrowers receive a lump sum of money.

Pros of a Home Equity Loan

There are different types of home equity loans which all offer a way to tap into the money you’ve already put into your home. But unlike the case with a HELOC, borrowers receive a lump sum of money.

•   Predictable payments Unlike HELOCs, which typically come with a variable interest rate, home equity loans usually have a fixed interest rate. The borrower can expect a reliable repayment schedule for the duration of the loan.

•   Low rates Because it’s a secured vs. unsecured loan, lenders usually consider a home equity loan lower risk and, therefore, offer lower rates. Secured loans also tend to be easier to qualify for than unsecured loans.

•   Potential tax deductions And, once again, there is a potential tax break. If the loan is used for capital improvements to the home, and you itemize your deductions, the interest may be deductible.

Cons of a Home Equity Loan

There are also some downsides to a home equity loan:

•   Rates may be higher than HELOCs Because a home equity loan’s interest rate won’t fluctuate with the market, the rate for a home equity loan is typically higher.

•   Closing costs As with most loans involving real estate, you’ll likely have to pay closing costs. These costs can range from 2% to 5% of the loan amount.

•   Foreclosure risk You may put your home at risk for foreclosure if you can’t make your loan payments.

Using a Personal Loan

You don’t necessarily have to tap into your home’s equity to finance a swimming pool. Many banks, credit unions, and online lenders offer unsecured personal loans that can be used for home improvements, including the installation of a swimming pool.

If you haven’t owned your home for long, or if your home hasn’t gone up much in value while you’ve owned it, a personal loan may be worth considering.

Pros of a Personal Loan for Pool Financing

Here’s a look at some of the advantages of using a personal loan for a home renovation like a pool:

•   Simple application process Applying for an unsecured personal loan is typically quicker and simpler than applying for a secured loan. With a personal loan, you don’t have to wait for a home appraisal or wade through the other paperwork necessary for a loan that’s tied to your home’s equity.

•   Fast access to funds Personal loan application processing and funding speeds vary, but many lenders offer same- or next-day funding.

•   Lower risk Because your home isn’t being used as collateral, the lender can’t foreclose if you don’t make payments. (That doesn’t mean the lender won’t look for other ways to collect, however.)

Cons of a Personal Loan for Pool Financing

Personal loans also come with some disadvantages. Here are some to keep in mind:

•   Higher interest rates Personal loans are unsecured, which means they generally come with a higher interest rate than secured loans that use your property as collateral. (However, borrowers who have good credit and don’t appear to be a risk to lenders still may be able to obtain loan terms that work for their needs.)

•   Origination fees Many (though not all) personal loan lenders charge an origination fee of between 0.5% and 8%, adding costs you might not have anticipated.

•   Less borrowing power Personal loan amounts range from $1,000 to $100,000 but how much you can borrow will depend on the lender and your qualifications as a borrower. With a home equity loan or credit line, you may be able to access more — up to 80% of your home’s value, minus your outstanding mortgage.

Should You Finance a Pool?

Installing a pool is an expensive home improvement, so you may need to borrow some money to pay for all or part of the project. Even if you have enough cash saved to pay upfront for a pool, you may still want to consider financing some or most of the project if you want to keep cash accessible for emergencies and other needs.

Financing with a low-interest loan (provided you can afford the payments) can make paying for a pool manageable. But before you borrow a large sum, you may want to consider how long you plan to live in your current home, how much pool maintenance might cost each month, if you’ll actually use the pool enough to make it a worthwhile purchase, and if the value added to your home is worth the investment.

The Takeaway

With an average cost of $65,909 in 2025, installing an in-ground pool is a costly proposition, but one that can be a wonderful addition to a home in terms of enjoyment and value. If you have significant home equity, you might consider using a cash-out refinance, home equity loan, or HELOC to finance your pool. Or it may be worth looking at a personal loan for pool financing.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much is it to install an in-ground pool?

As of 2025, the cost to install an in-ground pool is approximately $65,909, according to the home improvement website Angi. Costs may vary based on size, location, materials, design, and other factors.

How can I finance a swimming pool?

There are several ways to finance a swimming pool for your home. You might leverage your home equity with a home equity loan or home equity line of credit (HELOC). Or you might consider a home improvement personal loan.

Can I get an in-ground swimming pool for $20,000?

Whether $20,000 is a sufficient budget for an in-ground pool depends on several factors. Given that the average cost is currently about $66,000, you would likely have to get a very small pool (say, a plunge pool) and live in an area with a very low cost of living in order to keep costs in the $20,000 range.

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SOPL-Q425-018