What is the Average Interest Rate on a Car Loan if You have Bad Credit?
What is the average interest rate on a car loan if you have bad credit?
Figuring out how much interest rate you should be paying on a car loan is always tricky. When you have bad credit, it’s hard to know exactly what rates you should expect. It’s always best to ask for expert help so get in touch with Loans for People With Bad Credit so that we can help you to find the right rate for your car loan.
Understanding interest rates
It’s important to know interest rates change on a regular basis, you’ll want to consider this when deciding between a fixed or variable loan. Keep this in mind when searching for a car loan, as it will change the overall cost you’ll pay back per month.
If you have bad credit, you’re subject to face higher interest rates than with standard car loans. But that doesn’t mean you should be paying unreasonably high rates from lenders looking to exploit your situation. We want to help find a fair rate for you.
Low interest rates
To understand what average bad credit auto loan rates should be it’s helpful to know what a low interest rate is for bad credit car loans.
Generally, you won’t find a reputable bad credit car loan with an interest rate below 10% p.a. So if you’re loan is for $5000, you should expect to pay at least $500 p.a in interest rates.
You can compare this with a standard low interest car loan rate, which would be approximately 4.5% p.a – the difference is due to your credit rating.
High interest rates
Let’s compare the lowest interest rates you can expect with bad credit car loans with the highest you might expect.
In Australia, the maximum interest that lenders can charge on a car loan is 29.9% p.a. This is quite high and if we take the example of a $5000 loan, you’d be paying an additional $1495 on top of your car loan.
You can see how the rate of interest can make a huge difference on your car loan and it’s really important to get the best rate that you can.
Figuring out the best interest rates
It can be tempting to always choose the lowest interest rate available but make sure you’ve read all the small print before you sign any agreements.
Here are a few of the pitfalls of both low and high interest rates:
Low interest rates:
- Loan may have hidden extra fees
- Loan may have long loan term
- Your asset could depreciate quickly
- You could risk defaulting on your loan
- Interest rates can change (if not fixed rate)
Higher interest rates:
- You’ll have much higher monthly outgoings
- You’ll be paying more overall for the car in the long term
- Short loan term puts pressure on you to pay back quickly
Finding average bad credit auto loan rates
The basic rule is that you want to avoid very low interest rates as well as very high interest rates. To help you to find an average bad credit auto loan for you, you’ll need to speak with an expert.
Loans for People With Bad Credit have worked with people with bad credit for years and we have experience in helping people find the right car loan for their needs. We can save you the time of scrolling through numerous offers online and our expertise means we’ll instantly know when an interest rate is good for you.
Leaving it up to the experts means you can have peace of mind you won’t hit with unreasonable fees and charges. As well as saving you money, we’ll take the work out of stressful and tedious loan processing. Speak with a Loans for People With Bad Credit speciliast, call 1300 769 384 today.
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