A recent study from Bloomberg looked at the average interest rate borrowers from each state received on subprime auto loans. No matter where you live, having bad credit can create challenges when taking out an auto loan.
Riskier Borrowers Are in the South
In a recent study, Bloomberg analyzed the average interest rate borrowers in each state received on bad credit auto loans. They found borrowers in the southern states faced the highest auto loan interest rates. The reason why? Borrowers from these states are seen as being the riskiest to lenders, according to Bloomberg’s loan-level data.
With a percentage of 18.36, borrowers from South Carolina faced the highest average original interest rates on subprime car loans in 2017. Following South Carolina are four other southern states: Alabama, Georgia, Mississippi, and Tennessee. Borrowers in these states were all charged average rates of at least 17.3 percent.
Lower Credit Scores Mean Higher Interest Rates
Borrowers with bad credit are charged higher interest rates. What is the average interest rate you can expect? It all depends on your credit score. According to ValuePenguin, the average auto loan rate on a 60-month new car loan differs greatly based on FICO credit score:
- 500 to 589: 15.24%
- 590 to 619: 14.06%
- 620 to 659: 9.72%
- 660 to 689: 7.02%
- 720 to 850: 3.60%
If you’re in the subprime category (scores below 620), you could be paying loan rates four to five times higher – or more – than someone with a good credit score. As a subprime borrower, it’s important that you understand how your credit can affect the interest rate you qualify for.
Getting Your Credit On Track
Regardless of what state you live in, you’ll still face higher interest rates if you have bad credit. But it doesn’t have to be this way for the rest of your life. Here at Auto Credit Express, we help people needing a car work through their credit quirks by connecting them to local dealerships. The dealers in our network specialize in helping borrowers dealing with bad credit circumstances get financed so they can get on the road to better credit with an auto loan.
Get the process started by filling out our free and secure auto loan request form right now.