Complete Car Loans
Quick Answer: Can I get a car loan with bad credit?
Yes, you can get a car loan with bad credit, but you will likely face higher interest rates (averaging 13%–21%). To improve approval odds, use a co-signer, make a larger down payment (at least 10%), and compare offers from subprime lenders.
What Interest Rate Can I Get With Bad Credit?
Direct Answer: With a credit score between 500-639, you can expect auto loan interest rates between 19% and 21.6% APR as of December 2024. Borrowers with scores of 640-699 typically receive rates around 14.5% APR.
How Bad Credit Affects Your Auto Loan Rate
Your credit score is the single most important factor in determining your auto loan interest rate. Lenders use your credit score to assess risk—the lower your score, the higher the perceived risk, and therefore the higher your interest rate.
Industry Data (Q3 2024): According to Experian's State of the Automotive Finance Market report, borrowers with credit scores below 600 represented 16.7% of all auto loans originated. Their average interest rate was 19.0% for subprime (580-639) and 21.6% for deep subprime (500-579) borrowers.
Rate Factors Beyond Credit Score
While credit score accounts for approximately 45% of your rate determination, lenders also consider:
- Down payment amount: Larger down payments (15-20%+) can reduce your rate by 1-2 percentage points
- Loan term length: Shorter terms (36-48 months) typically receive better rates than 72-84 month loans
- Vehicle age and type: New cars generally get lower rates than used cars; vehicles older than 10 years may have limited financing options
- Debt-to-income ratio: Lower ratios (below 40%) demonstrate better ability to manage monthly payments
- Employment stability: 2+ years with current employer strengthens your application
Real-World Example: The True Cost of Bad Credit
Here's how the same $25,000 car loan compares across credit tiers over a 60-month term:
Interest: $4,220
Interest: $9,860
Interest: $16,088
Key Insight: A borrower with a 550 credit score pays $11,868 more in interest than someone with a 750+ score on the same $25,000 loan. That's nearly half the car's value lost to interest charges.
Complete Bad Credit Auto Loan Rate Breakdown
The table below shows current average rates for each credit tier, including monthly payments and total interest costs. Use this data to estimate your potential loan costs and understand what to expect when shopping for financing.
Current Subprime Auto Loan Interest Rates
Before you apply, it is critical to understand the baseline interest rates for your credit tier. The table below outlines the average Annual Percentage Rate (APR) you can expect based on current market data for both new and used vehicle financing.
Key Takeaways from the Data:
- Credit Tier Definitions: Lenders typically define “Bad Credit” (Subprime) as a FICO score between 501 and 600. Scores below 500 are categorized as “Deep Subprime.”
- The “Used Car” Premium: Expect to pay significantly higher interest rates for used vehicles—often 5% to 7% higher than new car rates for the same credit score.
- Impact on Payment: A lower credit score does not just mean a higher rate; it often requires a shorter loan term (e.g., 48–60 months) to secure approval.
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Current Rates – December 2024
| Credit Score Range | Credit Tier | Average APR | Monthly Payment* | Total Interest |
|---|---|---|---|---|
| 750 – 850 | Excellent | 6.5% | $487 | $4,220 |
| 700 – 749 | Very Good | 9.5% | $523 | $6,380 |
| 640 – 699 | Fair | 14.5% | $581 | $9,860 |
| 580 – 639 | Subprime | 19.0% | $649 | $13,911 |
| 500 – 579 | Deep Subprime | 21.6% | $685 | $16,088 |
*Based on: $25,000 loan amount, 60-month term (5 years). Rates current as of December 2024. Your actual rate depends on credit score, income, down payment, vehicle type, and lender. Source: Experian State of the Automotive Finance Market Q3 2024.
✓ You Can Do This
- Calculate affordability first: Use the 15% rule before shopping
- Compare APRs, not payments: Get quotes from 3+ lenders
- Get pre-qualified: Know your rate before visiting dealers
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