What is the highest interest rate you can receive on a car loan with bad credit?

Answer 1

As a former car salesperson I have seen as high as 25% on a car loan. I've been told they can go as high as 29%. I'll give you some tips though. First, get pre-approved! Often times you can get pre-approved through a lender for less interest than you can through the dealership. Why? Because they actually make money by "bumping" the rate. For instance, the bank approves you for 16%, but the dealership tells you that it's really 19%. They get money back from the banks by getting you to agree to the higher interest rate! Pre-approval prevents this from happening. Second, pick a car that you can trade out of in 18 months. Why? Because paying 15% to 20% on a car loan for 5 or 6 years is ridiculous! This car is meant to get your credit back on track. Every time you pay off a large debt it raises your score by 20 or more points. PLUS, having an 18 month history of good behavior will qualify you for a lower interest rate on another car. Third, don't load up on extras from the dealer. Get a basic warranty and GAP. Maybe the etch insurance. Nothing else! You're going to trade in the car anyway (don't tell them that though). So, bottom line - get pre-approved, pick a car that's around $12,000 or less for the firs time out. This way you won't be too upside down on the loan (if at all), and don't load up on extra stuff and you'll be alright!