--- title: Buying a New Car With Bad Credit Now Costs an Extra $18,000 description: With today's high auto loan rates, buying a new car with bad credit proves costly — perhaps an extra $18,000 over the life of a loan. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 600 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2023-05-10T20:16:21.000Z' modified: '2024-02-29T16:31:12.000Z' section: Economy and Politics tags: - cars - News word_count: 496 canonical: https://money.com/new-car-loan-rates-bad-credit/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Collage of Cars in the foreground with dollar bill in the background](https://img.money.com/2023/05/News-New-car-Bad-Credit.jpg) Presented by: ![](https://s3.consumersadvocate.org/prd/image/image/17685/971d4710-a188-4b9a-90d5-a887cc13f521.png) Lexington Law’s credit repair consultants will work on your behalf to dispute mistakes on your report. Start repairing your credit today! [Go to LexingtonLaw.com](https://money.com/pr/rabf86210f6e?ap_referrer=%2Fnew-car-loan-rates-bad-credit%2F) Rising [auto loan rates](https://money.com/best-auto-loan-rates/) are making it much more difficult to afford a [new car](https://money.com/best-autos/), especially if you have [bad credit](https://money.com/repair-bad-credit/). The average loan rate for a new car could inch even higher from an [April average of 8.9%](https://www.coxautoinc.com/insights/#snapshot) after the Federal Reserve [raised interest rates again](https://money.com/fed-raises-rates-last-time/) last week for the 10th consecutive time. With car loan rates this high, there’s a massive disadvantage to having bad credit when it comes to buying a new vehicle. How much extra you could pay over the life of a new car loan if you have bad credit is shocking — likely well over $10,000, and perhaps in the neighborhood of $20,000. ## Enjoy driving even more with the protection of a Car Warranty ### Endurance offers extended protection for your vehicle. Click on your state for a free quote today. [GET A FREE QUOTE](https://money.com/pr/p91e53b48e18?ap_referrer=%2Fnew-car-loan-rates-bad-credit%2F) ## Bad credit will cost you on an auto loan Take this [example from Kelley Blue Book](https://www.kbb.com/car-news/car-shoppers-with-lower-credit-scores-increasingly-have-nowhere-to-go/), which illustrates just how much of a difference your credit score can make in new vehicle loan rates: - It would cost a buyer with a great [credit score](https://money.com/what-is-a-credit-score/) $720 per month to pay for an [average-priced new car](https://www.coxautoinc.com/market-insights/kbb-atp-april-2023/) (about $48,000) with a 72-month loan and a 10% down payment. That’s based on a 6.2% loan rate for a buyer with a score of 720 or higher. - Meanwhile, a buyer with a credit score below 620 would typically pay a 17.9% loan rate, and the monthly payment would come out to $983, assuming the same loan terms. - By the time the car is paid off, the subprime buyer will have spent about $27,000 in interest, compared to the high-credit buyer, who will have spent $8,700. A roughly $260 per month difference in interest adds up to more than $18,000 over the full loan period. - Due to high loan rates, Kelley Blue Book reports that buyers with low credit scores are “dropping out” of the new car market. ## How credit affects car insurance premiums Bad credit can increase other costs related to buying and owning a car too. The cost of [car insurance](https://money.com/best-auto-insurance/) is up 15.5% since April 2022, according to the latest [consumer price index (CPI) inflation report](https://www.bls.gov/news.release/cpi.t02.htm). Like auto loans, drivers with bad credit usually end up paying more for auto insurance. - Only three states — California, Hawaii and Massachusetts — prevent insurers from using credit scores to calculate premiums, according to *[Consumer Reports](https://www.consumerreports.org/money/car-insurance/credit-scores-zip-codes-make-car-insurance-pricier-in-ny-a8532785979/)*. The insurance practice of factoring credit into premiums is controversial because your score has nothing to do with your driving record. But insurers argue it's a proxy for risk. - An April report from the [Consumer Federation of America](https://consumerfed.org/press_release/report-finds-new-york-drivers-pay-far-more-for-auto-insurance-solely-based-on-their-credit-scores-and-black-and-latino-drivers-face-steepest-price-hikes/), a nonprofit advocacy group, found that New York drivers with poor credit pay an average premium of $2,097, compared to an average of $730 for drivers with excellent credit. - If you have bad credit, it's even more important to [shop around](https://money.com/how-to-buy-car-insurance/) when looking for auto insurance. Some providers in your area may weigh credit less heavily in their premium calculations. - It's also a good idea to see if you can [improve your credit score](https://money.com/7-ways-to-improve-credit-score/), regardless of whether you're in the market for a new car. ## Looking for a way to fix your credit? Well, you just found it. ### Lexington Law uses a tried and tested process to help you work to remove negative items from your credit report. Click below to start working on repairing your credit. [View Plans](https://money.com/pr/u6e07a74f8f3?ap_referrer=%2Fnew-car-loan-rates-bad-credit%2F) ## **More on Car Insurance** | | | --- | | **Money’s Top Picks** [8 Best Car Insurance Companies of 2024](https://money.com/best-auto-insurance/) [6 Best Commercial Auto Insurance Companies](https://money.com/best-commercial-auto-insurance-companies/) [7 Best Car Insurance Companies in Florida](https://money.com/best-car-insurance-florida/) **Car Insurance Reviews** [CURE Auto Insurance Review](https://money.com/cure-auto-insurance-review/) [AAA Auto Insurance Review](https://money.com/aaa-auto-insurance-review/) [Lemonade Car Insurance Review](https://money.com/lemonade-car-insurance-review/) **Learn More** [How to Lower Car Insurance Premiums](https://money.com/how-to-lower-car-insurance-premiums/) [Tips for First-Time Car Insurance Buyers](https://money.com/tips-for-first-time-car-insurance-buyers/) [How Does Car Insurance Work?](https://money.com/how-does-car-insurance-work/) | ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/new-car-loan-rates-bad-credit/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Auto Industry", "item": "https://money.com/auto-industry/" }, { "@type": "ListItem", "position": 4, "name": "Buying a New Car With Bad Credit Now Costs an Extra $18,000" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/new-car-loan-rates-bad-credit/#webpage", "url": "https://money.com/new-car-loan-rates-bad-credit/", "name": "Buying a New Car With Bad Credit Now Costs an Extra $18,000", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-05-10T20:16:21.000Z", "mainEntity": { "@id": "https://money.com/new-car-loan-rates-bad-credit/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/new-car-loan-rates-bad-credit/#breadcrumb" }, "dateModified": "2024-02-29T16:31:12.000Z" }, { "@type": "NewsArticle", "headline": "Buying a New Car With Bad Credit Now Costs an Extra $18,000", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/05/News-New-car-Bad-Credit.jpg", "width": 2880, "height": 1920, "caption": "News-New-car-Bad-Credit" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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