If I Have Bad Credit, What Will the Interest Rate Be on My Car Loan?

There are many things that determine what your interest rate will be. It isn't only based on your credit, so don't worry too much if you have bad credit. Here are a few things that go into deciding what your interest rate will be.

Down Payment and Total Amount Being Borrowed

Banks don't want to lend you a large amount of money if they are not sure you can pay it off. So, the less they need to lend you, the better your chances are of getting a better rate. The bigger your down payment is, the less you'll need to pay off at the end.

Debt-To-Income Ratio

This is basically a measure of your ability to pay back your loan. If you have a lot owing in past debts, it could decrease your perceived reliability to pay back your loan. The more income you have coming in too, the more confidence they'll have in giving you more competitive rates.

Credit Score

While your score isn't the only thing a lender will look at, it is still the biggest factor. Things like payment history, the age of credit history and open credit lines can affect your score, so make sure you know where you stand before going into any negotiations.

How Long Your Term Is

The less term you have on your loan, the faster the lender can expect to get their money back. While a short-term loan may have lower interest rates, the payments will probably be higher. Keep this in mind when deciding on how long of a term you get.


Just because you have bad credit, doesn't necessarily mean your interest rate is going to be sky-high. Our Credit Specialist can help with any situation when it comes to your credit. Fill out our quick and easy credit application form to get the process started to get you into your dream car.