Interest Rates for Bad Credit Auto Loans in Washington, D.C. and Baltimore
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Unfortunately, many bad credit auto loans have high interest rates. These loans can help car shoppers with low credit scores afford reliable transportation, but the downside is the borrower may be taking on large and costly monthly payments over a prolonged period.
If you have an auto loan of $15,000 over a five-year term, even a 10 percent interest rate will result in $7,500 to be paid on top of your loan. Longer terms will result in lower monthly payments but more total interest owed since interest will be accruing for extra years, while shorter terms can help you pay less interest total if you’re willing to pay more monthly.
However, those with subprime and deep subprime credit scores can often be subjected to higher interest rates of 20 percent or higher, even with shorter terms. Lenders tend to elevate interest rates to protect their investments since low credit borrowers are more likely to miss payments or default on their loans.
At Easterns Automotive, we don’t believe our customers should be treated like a statistic. If you have a job, you deserve to have fair terms on your loan, even if you have a low credit score. We’re the “Your Job is Your Credit™” dealership – as long as you have a job, we’ll provide you with a great certified pre-owned car with flexible financing. Our team will leverage our extensive network of lenders and financial institutions and negotiate for the best possible loan on your behalf.
Are Interest Rates Better for New or Used Cars?
It’s usually better to buy a used car than a new car since almost everything from the initial cost to the insurance will be more affordable. However, interest rates are the exception. Auto loan lenders tend to charge higher rates for used cars than new cars to account for a potential drop in value. The average auto loan for someone with a credit score ranging from 500 to 600 is around 18 percent for a used car and 12 percent for a new car.
However, this isn’t the case for certified pre-owned vehicles. The certified pre-owned cars at Easterns Automotive are still under manufacturer-backed extended warranties. We also provide our own 30-day/1,000-mile warranty for your peace of mind. Because our cars cost less than new cars while maintaining a higher resale value than used cars, you can get the best of both worlds and secure a smaller loan with a lower interest rate.
Tips for Securing a Favorable Interest Rate for Your Bad Credit Auto Loan
Pre-Qualify: Pre-qualification, or a comprehensive, preliminary review of your qualifications from a lender, can give you an idea of how much you can feasibly expect to borrow for your used car purchase. Gaining insight into how high your interest rate will be can let you know how much you might be spending over the next few years.
Pre-qualification can also help you understand how to improve your application so you can secure a favorable interest rate, such as by removing errors on your credit report or reducing your debt if possible. Moreover, undergoing pre-qualification can also show lenders that you’re an informed borrower, making them feel more confident in giving you a loan with lower interest rates.
Getting a Co-Signer: A co-signer is someone with a higher credit score, steady income and minimal debts who takes responsibility to make up any missed payments or defaulted loans on behalf of the primary signer. In other words, they ensure that the loan will be repaid one way or another, increasing the application’s likelihood of success.
The downside is that any missed payments will negatively affect the co-signers financial situation as well as yours. Make sure your co-signer understands the risk involved and you’re prepared to be responsible for yours and their credit scores before signing on.
Negotiate: Putting down a sizable down payment can give you the power to negotiate for a lower interest rate. Having experts negotiating on your behalf can substantially bolster your chances of securing a great deal with ideal loan terms. Our auto loan team has years of experience negotiating with lenders and will fight for a fair interest rate on your behalf.
No Matter What Your Credit Score Is, We’ll Give You a Competitive Price on a Certified Pre-Owned Vehicle
At Easterns Automotive, we’ve won DealerRater’s “Consumer Satisfaction Award” for seven years in a row for customer-focused service. Our team will also provide you with high-quality, certified pre-owned vehicles from every maker and offer personalized strategies to increase your loan application’s chances of success, even if your credit score is low and your timeline is short.
Check our inventory online or in person at one of our Easterns Automotive dealerships in Maryland or Virginia. If you have questions, don’t hesitate to contact one of our dedicated financing experts today.