What interest rate can you get on a car loan with bad credit?

With low or rebuilding credit, your rate will be higher than the lowest advertised bank rates, and how much higher depends on your whole picture, not just your score. The average new-car loan rate was near 6.5 percent in late 2025, with rebuilding-credit and used-car rates running higher. Every figure depends on a lender approving you.

What affects your car loan rate the most?

Your credit history, your income and job stability, your down payment, the loan length, and the car itself. A bigger down payment, a shorter loan, steady provable income, and a reasonably priced car all lower the lender's risk and can improve your rate, though none guarantee a certain number.

Do used cars have higher interest rates than new cars?

Usually yes. Used cars tend to carry higher rates because lenders see them as more of a risk, and that gap widens with lower credit. But a sensible used car often means a smaller loan overall, which can matter more than the rate. The goal is the lowest total cost you can comfortably carry, not just the lowest rate.

What car loan rate can you get with bad credit?

Q: What credit score do you need for a car loan?

There's no magic cut-off. Lenders weigh your income and stability right alongside your score, and people with scores well into the lower range get financed all the time, usually at higher rates through specialists. The more useful question is which lender fits you, which saves you the turndowns and credit dings.

On this page (8 questions)

What rate can you get with bad credit?
What credit score do you need for a car loan?
What affects your rate the most?
Do used cars cost more to finance?
How much does a higher rate actually cost you?
Can you get a lower rate later?
What's realistic for your situation?
How Simply Drive helps you compare

The honest answer is "it depends," but that's not very helpful on its own. So let's make it useful. Below, we'll go through what actually sets your rate when your credit is low or rebuilding, what's realistic to expect, and how a higher rate shows up in real dollars, so you can plan with your eyes open.

Quick note: this is general help, not legal or money advice. Any rate you hear about depends on a lender saying yes, and nobody can promise you one ahead of time.

What rate can you get with bad credit?

With low or rebuilding credit, your rate will be higher than the lowest advertised bank rates. How much higher depends on your whole picture, not just your score. Lenders charge more when they see more risk, and a thin or bruised credit history reads as more risk.

For a bit of context, figures pulled together from Statistics Canada data put the average new-car loan rate near 6.5 percent in late 2025, with rebuilding-credit and used-car rates running higher. What you're offered comes down to your income, the car, the loan length, and your down payment. Every figure depends on a lender approving you.

In plain terms: APR is just the yearly cost of borrowing, shown as a percentage. A higher APR means more interest over the life of the loan. When you compare offers, the APR and the total you'll pay matter way more than the size of one bi-weekly payment.

What credit score do you need for a car loan?

There's no magic cut-off. Lenders weigh your income and how steady things are right alongside your score. People with scores well into the lower range get financed all the time, usually at higher rates and through lenders who specialize in it.

So the more useful question isn't "what score do I need." It's "which lender fits me." A specialist matches your situation to lenders whose rules you already meet, instead of sending your file to a bank that'll just say no. That saves you the turndowns, and the credit dings that come with them.

What affects your rate the most?

A few things do most of the heavy lifting:

Your credit history. The deeper and cleaner it is, the better.
Your income and job stability. Steady, provable income helps a lot.
Your down payment. More money down lowers the lender's risk.
The loan length. A shorter loan often earns a better rate.
The car itself. A newer, reasonably priced car is easier to finance than an old, high-kilometre one.

None of these guarantee a certain rate. But pull a few of them in your favour and the offer usually moves your way.

Do used cars cost more to finance?

Usually, yes. Used cars tend to carry higher rates than new ones, because lenders see them as more of a risk, and that gap gets wider with lower credit. Age, kilometres, and how reliable the car is expected to be all play in.

That said, new isn't automatically the smarter money move. A sensible, reasonably priced used car often means a smaller loan overall, and a smaller loan can matter more than the rate. The goal is the lowest total cost you can comfortably carry, not just the lowest rate on paper.

How much does a higher rate actually cost you?

The bigger and longer the loan, the more a higher rate stings, which is exactly why the total cost matters more than the rate by itself. A few percentage points can add up to thousands of dollars over a few years.

The clearest way to see it is to run the numbers. The car loan calculator lets you punch in a price, down payment, term, and your credit situation, and it shows the bi-weekly and monthly payment plus the total interest. Try a couple of loan lengths and you'll see the trade-off between a smaller payment and a bigger total.

Worth knowing: "On approved credit" means any rate or payment you see is only real if a lender approves you. The final number is always up to their review. We attach that to every figure we give you, because it's the honest way to talk about rates.

Can you get a lower rate later?

Yes. Once your credit improves and you've built a record of on-time payments, refinancing to a lower rate is often possible. That's a big reason an affordable loan today, paid faithfully, can lead somewhere better.

The path is simple in theory:

Make every payment on time
Let your credit history strengthen
Revisit the rate after a good stretch of consistency

There's no fixed timeline, and it's never guaranteed, but plenty of people who start with a higher rate refinance to a better one down the road.

What's realistic for your situation?

Lenders always set the rate after looking at your file, so any range is just a rough guide, not a quote. Still, it helps to see how situations tend to line up.

Your situation	Where the rate tends to land
Strong, established credit	Closest to advertised bank rates
Fair or thin credit	A bit above prime
Rebuilding after a setback	Well above prime, varies a lot
During or just after insolvency	Highest, through specialist lenders

These are tendencies, not promises. Your real offer depends on the full picture. For more on your specific situation, see car loans in Ontario when you are rebuilding credit and car loans after bankruptcy.

How Simply Drive helps you compare

We're an education-first concierge, so our job is to find you the right lender and keep every cost in the open, not to run your credit over and over.

You share your situation and income
We take your file to our lender partners
We come back with a real rate, term, and payment, all depending on a lender's yes
We find a car that fits, with the full cost broken out before you sign

The free assessment is a no-pressure way to see what's realistic, with no contact details needed to begin.

A calm next step

If you want to know what rate is realistic for you, the assessment gives you a straight read, and the calculator shows what a rate means as a payment. Both are free, make no "get approved" promises, and carry no obligation.

Start the free assessment →

Simply Drive is not a bank, credit union, financial advisor, financial planner, or lender. This page is general education and not financial, legal, or insolvency advice. Any rate or payment is on approved credit and subject to lender approval, and no rate can be promised in advance.

Last updated July 19, 2026.