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What Is The Average Interest Rate On A Bad Credit Car Loan?


When it comes to securing a bad credit car loan in Hamilton, there are a few things you need to keep in mind. Obviously it’s important to know your credit score, as well as whether or not it’s suitable for credit repair, which could boost it considerably, but it’s also important to remember some of the other factors that affect the kind of loan you’re able to receive.

For example, interest rates aren’t the only way that your car loan could be affected by the credit score. They’re only one factor that’s taken into account within the context of there existence of all of the other factors, so it’s absolutely vital to arm yourself with as much knowledge as possible to ensure that you’re not in danger of getting hoodwinked into a subpar deal that you could wind up regretting for many years to come.

Cars are a matter of convenience for most of us and a matter of necessity for just about all of us. How else are you going to be able to get around? Assuming you don’t live in a big city with adequate public transport facilities to fit your needs (as most of us don’t, to be completely honest), there’s simply no other way you’re going to be able to function in everyday life.

After all, when it comes to the topic of bad credit car loans in Hamilton, it’s easy to get sidetracked into only looking at the actual numerical figures, but it’s a mistake to ignore the overall value of the car you’re bringing into your life. For many of us, it’s the first step we ever take on our financial journey as responsible adults, and for that reason alone it deserves plenty of thought and careful consideration before your name is ever signed on any paperwork.

The Risk Factor

A blackjack hand.

It’s well known that lenders charge higher rates to buyers with bad credit scores because the lower credit score indicates a greater risk factor for the lender. As it happens, interest rates actually don’t go towards the value of the car at all.

What you’re paying in interest is essentially a way to ease the financial conscience of the lender in question, which is another good reason to get your affairs in order by practicing some credit repair techniques or ensuring you’re up to date with all of your current financial obligations well before you ever sign up for a bad credit car loan in Hamilton.

Before you consider financing your vehicle, it’s a good idea to look up the average rates of interest you’ll be able to expect based on your credit score. Because the internet is absolutely awash with all kinds of articles promising the final word on these average rates, we’ve decided to collate the most reasonable figures into a general range of interest rates, so that while we can’t promise you exactly what rate you’ll be able to expect on your bad credit car loan in Hamilton, we can assure you that it’s extremely likely to fall into one of the ranges listed below.

Just look up where you expect your credit score to be by the time you finance the bad credit car loan in Hamilton, and assume that the interest rate you’re likely to receive is going to fall somewhere within the range listed. By doing this, you can ensure that you’ll be able to budget properly for the purchase and won’t get stuck tanking your score even more by taking on financial commitments you’re not able to keep up with.

Average Interest Rate Ranges By Credit Score

  • Superprime (> 780) : New Car Loan 3-3.5%, Used Car Loan 3.5-4.5%
  • Prime (661-779): New Car Loan 4-4.5%, Used Car Loan 5.5-6%
  • Nonprime (601-659): New Car Loan 7-7.5%, Used Car Loan 10-11%
  • Subprime (501-599): New Car Loan 11-12%, Used Car Loan 16.5-18%
  • Deep Subprime (< 501): New Car Loan 13.5-15%, Used Car Loan 19-20%

As you can see, the rates quickly soar upwards as the credit scores get lower and lower. Bear in mind these are just averages, and the specific terms of your bad credit car loan in Hamilton will vary to a degree.

Some Strategies

A game of chess.

With that out of the way, we’re going to move onto a few tips you can apply if you have a poor score to be able to get the most out of your bad credit car loan in Hamilton. While none of these is a foolproof guide to securing that elusive Superprime rating, there’s no way any of the strategies below are going to do your prospects any harm, and so we really recommend endeavoring to take at least a few of these into account before you sign any paperwork for a bad credit car loan in Hamilton.

First of all, the biggest advantage you can give yourself is to actually know what your credit score is before you turn up to the dealership. While this may seem like a no-brainer, you’d be amazed at how many people are perfectly happy to walk onto the lot and count on the salesman to look up their score for them.

By doing this, they’re leaving themselves completely unprepared, and consequently have no way to judge whether the deal they’re being offered is a fair one or not. While we’re a big fan of car dealers here at HamiltonBadCreditCarLoans.ca, there’s no denying that their main job is to sell you a car, which is an expensive proud t by anybody’s standard. With that in mind, you need to protect yourself, and knowing what your score actually is before negotiating the bad credit car loan in Hamilton is an excellent way to go about doing this.

Credit Repair

A collection of tools.

The second tip is to actually practice as many credit repair techniques as possible in the limited amount of time you have before applying for the bad credit car loan in Hamilton. Obviously, there’s not necessarily going to be enough time to make a major dent in a bad score, but it certainly can’t hurt, and at least you’ll know you did your best.

While the process itself isn’t going to have enough time to work properly, if nothing else you’ll be able to pick up the good financial habits that form the foundation for all credit repair techniques and then apply those to later financial decisions, maybe even including a different bad credit car loan in Hamilton.

While it’s beyond the scope of this article to go in-depth into every credit repair technique there is, we’re going to outline a few now, just to give you an idea of what you might find yourself doing in the future as you prepare yourself for another bad credit car loan in Hamilton.

Long-Term Thinking

The first principle you need to think about applying to your own financial situation is the most important one you’ll ever be able to put into practice, and that’s to change your thinking from short-term goals towards long-term goals. While this is much easier said than done (like just about anything worth doing), it’ll stand to you no matter what happens with your current bad credit car loan in Hamilton.

Our finances are built on a long-term schema, but we as humans generally have a tough time seeing far enough ahead in order to plan decisively for events which may only arise a decade or two down the line. But when it comes to repairing your credit score, thinking long-term is the single best way to give yourself a shot at really giving it a boost. After all, you can only receive a few free credit reports every year. That’s not enough data to get a general running outlook of how exactly your score is performing.

Keeping that in mind, thinking long-term is going to enable you to quit focusing on the day-to-day minutiae of credit repair practices, and switch your focus over towards making a sizeable change to that one little score which will prove so important across many different areas of your life.

Everybody learns differently. Some people are very visual, and get the best return on their time by browsing graphs, charts, and other graphical representations of data. In contrast, others among us are what’s known as verbal learners, where the best way we can pick up a new concept is by first reading and then writing about it.

No matter which way you learn, do your best to adapt this particular strategy to what works for you when it comes to attempting to re-frame your thinking towards a more long-term oriented manner of thought.

Handle The Credit Cards First

The second credit repair technique we’re going to briefly outline is to make it a priority to pay off all of your credit cards. This will undoubtedly require some sacrifices to be made. It doesn’t really matter where you trim the fat in your monthly budget; while many of us think we’re living as frugally as possible, that’s rarely the case, and there’s almost always a little wiggle room somewhere in the plan.

We’re emphasizing paying off your credit card debt first because that’s one of the most heavily-weighted variables in the way FICO calculate your main credit score. It can be tempting to go straight for the most serious debts, like student loans, but that’s not the best way to get your score moving in the right direction as soon as possible. As long as you can manage somehow to get the credit cards sorted, the rest is likely to fall into place easier than you may have previously thought possible.

Make A Change

Finally, resolve to pay every single bill you receive in full and on time. If you’ve got a history of delinquent payments, they’re going to stay on your record for the next seven years, but that’s no excuse for getting fatalistic about the whole thing. Sure, there’s a mark on your report that says five years ago you missed a payment.

Who hasn’t missed a payment now and again? And if you can build up a solid history of committing to your financial obligations, whichever lender is running a check on your credit score is going to be able to see that the delinquent payment was more of an exception than a rule, and you’re likely to get approved for a car loan in Hamilton—or any other kind of purchase which requires a financing plan of some variety—at least a little bit more easily.

A Final Word

If you’ve been tearing your hair out trying to get approved for a car loan on account of your poor credit score, get in touch with the team here at HamiltonBadCreditCarLoans.ca. We specialize in offering assistance to people in exactly your situation, and would love to find out if we could help you as well.

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