What Is the Average Interest Rate for a Car Loan with Bad Credit?
Contents
If you’re looking for a car loan with bad credit, you might be wondering what the average interest rate is. Here’s what you need to know.
Checkout this video:
Introduction
Bad credit can make it difficult to get a car loan with a decent interest rate. In fact, if you have bad credit, you may not be able to get a loan at all. But there are some things you can do to improve your chances of getting a car loan with bad credit, and in this article, we’ll explore some of those options.
First, let’s take a look at what is considered bad credit. Generally, a FICO score below 620 is considered bad credit. If your score is below that, you may still be able to get a car loan, but the interest rate is likely to be higher than if you had good credit.
There are a few things you can do to improve your chances of getting a car loan with bad credit. One thing you can do is to try to get pre-approved for a loan before you go shopping for a car. This way, you’ll know how much money you have to work with and what interest rate you can expect to pay. Another thing you can do is to shop around for loans and compare offers from different lenders.
It’s also important to remember that just because you have bad credit doesn’t mean that you won’t be able to get a car loan. There are plenty of lenders who specialize in loans for people with bad credit. So don’t give up hope – keep shopping around until you find the right lender for your needs.
The Average Interest Rate for a Car Loan with Bad Credit
The average interest rate for a car loan with bad credit will depend on a number of factors, including the lenders you use, your credit score, and the type of vehicle you’re looking to purchase. In general, however, you can expect to pay an interest rate that is higher than the average for those with good credit.
How to Get the Best Interest Rate for a Car Loan with Bad Credit
The average interest rate for a car loan with bad credit is higher than the average rate for a car loan with good credit. The difference in the interest rate is called the “risk premium.”
The risk premium is the additional interest charged to borrowers with bad credit to compensate lenders for the increased risk of default. The size of the risk premium varies depending on the lender, but it is typically several percentage points higher than the rate for a loan to someone with good credit.
The best way to get the best interest rate for a car loan with bad credit is to shop around and compare rates from multiple lenders. You can use an online lending marketplace like Credible to compare rates from multiple lenders at once.
Credible is a marketplace that allows you to compare rates from multiple lenders in one place. The process is easy and only takes a few minutes. You can get started by clicking here.
Conclusion
While there is no definitive answer to this question, the average interest rate for a car loan with bad credit is typically higher than the rate for a loan to a borrower with good credit. This is because lenders view borrowers with bad credit as higher-risk and therefore charge a higher rate to offset this risk. If you have bad credit and are looking for a car loan, it’s important to shop around and compare rates from multiple lenders in order to get the best deal possible.
