What is the Average Interest Rate for a Car Loan with Bad Credit?
- March 6, 2023
- Bad Credit
- Posted by Ryan
- Comments Off on What is the Average Interest Rate for a Car Loan with Bad Credit?
Your credit score can affect a lot of financial offerings, including mortgages, credit cards, and car loans. If you need to buy a car, but your credit is less than stellar, you need to know what you can expect in terms of interest rate and other costs. Let’s take a closer look at the average interest rates for car loans with bad credit.
How Does Credit Score Affect Car Loan Interest Rate?
Your credit score is essentially a measure of your “creditworthiness” or how responsible you are as a borrower. The higher your credit score, the more loans will be available to you and the lower your interest rates will be.
Your interest rate is how much money is added to your loan total or balance each billing cycle. A higher interest rate means you’ll pay more for a loan over its lifespan compared to a lower interest rate.
Generally, if you have a bad credit score (typically thought of as 500 or lower), your interest rates will be higher for car loans and all other loan types. Note that interest rate isn’t exactly the same as APR, which includes both the interest rate and any other yearly fees you may need to pay, like origination fees.
Average Rates for Bad Credit Car Loans
When you take out a car loan with bad or subprime credit, your interest rate can vary heavily depending on factors like the size of the loan or loan total, the loan term, and your relationship with the lender. On average, however, bad credit car loans have average interest rates as follows:
- Nonprime credit score (601 to 660) – 7.25% for new car loans and 9.81% for used car loans
- Subprime credit score (501 to 600) – 10.11% for new car loans and 15.86% for used car loans
- Deep subprime credit score (300 to 500) – 12.93% for new car loans and 19.81% for used car loans
Remember, these are just averages. But you can and should use them to calculate roughly how much money you’ll have to pay each month if you decide to take out a bad credit car loan.
Contact CarNCredit Today
Discovering the right car loan for your needs can be tricky. That’s where CarNCredit can help. Contact us today to learn more and to find the right financing solution for your unique budget.