Considering your options
The average user car loan rate was 11.87% in Q1 2025, according to Experian. However, the average for customers with Deep subprime (credit scores 300 to 500) and Subprime (credit scores of 501 to 600) credit was 21.58% and 18.99%, respectively.
Considering you say you have bad credit, the rate you were offered at the start (14.89%) isn’t surprising. However, it doesn’t mean you made a smart financial decision with this purchase. More on that later.
Now it seems the actual rate has come through at 15%, which means the dealership may be engaging in yo-yo financing. Or, it could just be a case of poor communication.
Usually, with yo-yo financing, there's a substantial difference between the original APR offered and the one a dealer tries to stick you with. Here, the difference here isn't so tremendous. Also, dealers commonly use yo-yo financing to lure buyers with super low rates. A 14.89% APR isn't that competitive.
Review the paperwork you signed. It could be that it says the sale is not final and the dealer can change the terms. In this case, you would have to resign the documents with the new APR to keep the car.
You probably also have the right to give back the car instead of paying a 15% APR on your loan.
This could actually be a great opportunity to get out of a bad deal that could hurt you financially. It may be time to give back the car and consider other options, like saving up for a car you can pay in cash for or saving to pay a larger down payment. You don’t want to be stuck making payments for a car that you can’t afford, and a 14.89% rate is quite high.
If you’re committed to keeping the car, you'll have to decide if it's worth paying the slightly higher rate. You may be able to refinance later. You can also find alternative financing for the car instead of going through the dealer. If you shop around, you may secure a lower APR.
Kiss your credit card debt goodbye
Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.
Explore better ratesHow to snag the best rate you can get on an auto loan
A lower APR means lower interest costs and monthly payments. So, always do what you can to secure the lowest rate possible.
One of the best ways to do this is by boosting your credit score. According to Experian, the average used car loan rate for Prime (credit scores of 661 to 780) and Super-prime (credit scores of 781 to 850) buyers was 9.06% and 6.82%, respectively.
“There's no minimum credit score required to get an auto loan. However, a credit score of 661 or above … will generally improve your chances of getting approved with favorable terms,” says the credit bureau.
To boost your credit score, aim to pay all debts on time and try to keep your credit utilization as low as possible. Credit utilization is the percentage of total available credit that you’re currently using, and is a key credit score factor. Paying down credit card debt can improve your utilization.
It’s also important to check your credit report regularly for mistakes. You can request a free copy every week here.
Also, shop around when you're taking out an auto loan, and don't assume your dealership has the best rate to offer.
Financing an auto loan through your dealership may be convenient, but you're probably better off reaching out to banks and credit unions to see what rates they offer. A good place to start is with a bank or credit union you already have a relationship with.
Choosing a shorter auto loan term can lower your interest costs, assuming you can get the same interest rate or better. You’ll have a higher monthly payment, but you should pay less interest by paying off your car loan more quickly.
Finally, you can also save on interest by taking out a smaller loan, by providing a larger down payment up front, or purchasing a more affordable vehicle.
Make your home work harder for you by making the most of your equity.
The average homeowner sits on roughly $311,000 in equity as of the third quarter of 2024, according to CoreLogic. Having access to your home equity could help to cover unexpected expenses, fund a major purchase like a home renovation or supplement income from your retirement nest egg.
Unlock great low rates in minutes by shopping around. You can compare real loan rates offered by different lenders side-by-side through LendingTree.
