In the first three months of 2018, the average monthly car loan payment on a new vehicle was $537 for subprime buyers, according to Experian's State of the Automotive Finance Market report. With interest rates expected to increase this year, the best time to finance a vehicle is now.
The Average Loan Payment for a Bad Credit Auto Loan
The better your credit score, the better the interest rates you’ll be offered. Experian lists car buyers in the subprime category as having credit scores below 600. According to their report covering the first quarter of 2018, the average used car payment for subprime buyers was $385 a month. Even if you’re keen on buying new, if your credit is less than perfect, it might be best to consider buying used.
Keeping Your Car Payments Low
Because the average car payment for both new and used vehicle buyers continues to increase, most borrowers who have bad credit will most likely be more interested in buying a used car. Since used vehicles generally sell for less, it’s safe to say your monthly payment likely won’t reach the current average new car monthly payment. But, depending on your loan term, interest rate, and specific vehicle, the monthly payment could be higher than anticipated.
So, in order to keep your monthly payments cost-friendly, you’ll need to stay on top of your budget before and after you take out a new loan.
Before you sign the papers:
Research and plan – Look at your current finances to determine how much you’ll be able to afford each month without overextending your budget. Online tools such as our Car Loan Estimator can help you get an idea of how much you might be paying for a car loan. Lenders look at various things such as your income and monthly bills to determine your maximum allowed monthly payment.
After you sign the papers:
Keep making payments – Once you’ve signed the loan contract, you’ll need to keep up with your monthly payments. Things can happen, and if your financial situation changes during your loan, you should immediately contact your lender. Most lenders – especially if you've kept up on your payments – will try to help you through this type of situation. Depending on the situation, a lender may be willing to allow you to skip your current (and possibly your next) payment, and add it to the end of the loan term.
The Bottom Line
There’s no way to determine your monthly payment with bad credit. It all depends on your current credit and budget situation. Make sure you budget and plan ahead of time, so you don’t overextend yourself on an auto loan.
If you're struggling with credit issues and need to finance a car, it can be tough not knowing where to turn. Luckily, Auto Credit Express makes finding financing fast and easy with our network of special finance dealerships. We'll work to connect you with a local dealer if you submit our free and secure auto loan request form.