Getting a car loan with bad credit can be a difficult endeavour — especially if your financial history isn’t quite favourable.

However, while it’s true that many lenders impose harder rules when financing people with poor credit history, this is definitely not the case with Finance One, as our business strives to offer the best financial solutions for its customers.

Let’s discuss what vehicle loans for bad credit entail and what you can expect the average interest rate for such a loan to be.

What are car loans with bad credit?

Before we talk about the interest rates, let’s first delve into what a car loan with bad credit means. Generally, car loans with bad credit are a type of loan offered to people with poor credit scores or a history of financial hardship. The common conception is that these loans typically have higher interest rates and less favourable repayment terms than traditional car loans.

It’s important to understand the terms and conditions of any loan you’re considering, as well as the potential risks associated with taking out a loan with bad credit. To understand more about interest rates and car loans, check out our blog post tackling these subjects.

The average interest rate for car loans

It can be hard to know whether the interest rate for a car loan with a bad credit rating is good or not if you’re unaware of the average interest rate for car loans in general. As of 2022, the average interest rate for new vehicle loans is 5.97%, while the average used car loan interest rate is 6.58%. So, if you obtain a rate that is lower than the average, you are getting a good bargain.

That being said, many factors determine how high or how low your interest rate might be. One of these factors is a poor credit rating. To learn more about this, check out our article about interest rates and how they’re determined.

What is the average interest rate for a car loan with bad credit?

Generally speaking, the average interest rate for a car loan with bad credit can be anywhere between 15% and 20% — much higher than the rates that lenders offer prime borrowers. This is because the lender will see you as a greater risk based on your past financial conduct. Although bad credit car loans are an easy way to acquire a new vehicle, many people steer clear of it due to unfavourable terms. To get a better grasp on why, read our article on car loan interest rates for bad credit.

Vehicle loan calculator

If you’re interested in learning how good a deal you can get with Finance One, our vehicle loan calculator is a great tool for anyone considering taking out an auto loan. This type of calculator can help you determine how much you would need to borrow and how much the monthly payments are likely be.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.