If you have bad credit and have applied for a car loan, you will probably get hit with a substantial interest rate. The interest rate depends on different factors. One of those factors is your credit score of course. The lower your credit score, the more difficult it is to get a lender to fund your car loan. In return you receive a higher interest rate. Before applying for a car loan it is best to keep your score up by paying all bills on time.
So are you paying too much? That's completely up to you. Regardless of the interest rate, make sure you know what your payments are and make sure you can afford them. Otherwise you will damage your credit and you could be walking instead of driving.
More than likely your car loan finance specialist will try to get you the highest interest rate possible. The reason being; the more interest you pay, the more money they make. Dealers will make money two ways: Your up front costs as well as commissions from their car loan lender. The dealer is usually given a certain rate from the lender but they can charge additional percentages in order to make more money. For example, the car loan lender may approve a rate of 12% for your car loan. The dealer has the ability to boost this to as high as 17% in exchange for a higher commission.
