Car Insurance With Bad Credit: What It Costs
Most states allow insurers to use a credit-based insurance score, and poor credit generally raises premiums substantially. A few states restrict or ban the practice. Insurance is a separate line from the loan: a $15,000 loan at the 18.86% subprime average is $388 a month over 60 months, and the premium sits on top of that. Quote the specific vehicle first.
Figures reviewed 2026-08-05 (yesterday). Rate data is sourced per table and each table states its own reporting period.
Key takeaways
- A credit-based insurance score is not your FICO score and is not the score an auto lender pulls, though both are built from credit report data.
- Most states permit insurers to use credit-based insurance scores in pricing; a small number restrict or prohibit the practice, and the rule that applies to you is published by your state's department of insurance.
- Lenders require comprehensive and collision coverage on a financed vehicle, so the cheapest liability-only policy is not an option while there is a lien.
- The premium is frequently the line item that breaks a subprime budget: on a $15,000 loan at 18.86% over 60 months the payment is $388, and insurance is charged separately on top of it.
- Premiums vary enough by vehicle, driver, and location that the only reliable figure is a quote on the specific car you are considering, obtained before you sign anything.
Does bad credit raise car insurance rates?
In most states, yes. Insurers there are allowed to use a credit-based insurance score as one factor in pricing, and a weaker credit file generally produces a higher premium — often by an amount large enough to change which car you can afford.
A small number of states restrict or prohibit the practice. Which category you are in is not something this page can tell you, because it varies and it changes: your state's department of insurance publishes the rule that applies where you live, and that is the authoritative source.
This page does not print a premium figure. Any number printed here would be wrong for most readers, because quotes move with the vehicle, the driver's age and record, the ZIP code, the coverage limits, the deductible, and the state's rules. A real quote on a real car is the only figure worth budgeting against.
What is a credit-based insurance score?
A separate score, built from credit report data, designed to predict the likelihood of filing claims rather than the likelihood of repaying a loan.
Three different numbers can come out of the same credit file, and they are commonly confused:
| Score | Who uses it | What it predicts |
|---|---|---|
| FICO or VantageScore | Lenders, landlords, general use | Repayment risk |
| FICO Auto Score | Auto lenders | Repayment risk on a vehicle loan |
| Credit-based insurance score | Insurers, where permitted | Claim likelihood |
The practical consequence: a borrower who has raised their credit score enough to improve their loan rate has probably improved their insurance position too, but the two do not move in lockstep and neither one is visible in most free credit apps.
How do I build a budget before I have a quote?
Start from the half of the budget that can be computed exactly, then treat the premium as the variable you have to go and find.
The loan payment is knowable to the dollar from three inputs: amount financed, APR, and term. The premium is knowable only from a real quote. Buyers reverse this — they spend hours at the dealership on the payment and ten minutes on insurance in the parking lot afterwards, by which point the loan payment is fixed and the premium is simply a second bill.
Here is what the loan side costs at each tier, over 60 months, so the fixed part of the budget is settled before the variable part is quoted:
| Amount financed | Near prime 14.11% | Subprime 18.86% | Deep subprime 21.58% |
|---|---|---|---|
| $10,000 | $233 | $259 | $274 |
| $15,000 | $350 | $388 | $411 |
| $20,000 | $467 | $517 | $548 |
*Principal and interest only, 60-month term. Rates: Experian used-vehicle averages by tier, Q4 2025.*
Then build the whole picture before you sign, with your own quote in the blank line:
| Line item | Where the number comes from | Example |
|---|---|---|
| Loan payment | Computed from amount financed, APR, term | $388 |
| Insurance premium | Your own quote, on the specific vehicle | — |
| Registration, title, taxes | Your state and county | — |
| Fuel and maintenance | Your own driving, honestly estimated | — |
| Total monthly cost of the car | Sum of the above | — |
Lenders test the loan payment against your income — that is payment-to-income, commonly capped around 15% to 20%. Your household budget has to carry the whole table. A payment that passes the lender's test can still be unaffordable once the premium is added, and the lender's approval is not a statement that you can afford the car.
Does the lender's requirement raise the number I have to budget?
Yes, because the cheapest policy advertised is not the policy you are allowed to buy. A lender holding a lien requires comprehensive and collision coverage, so the liability-only quotes in the ads are not your floor. The full requirement — limits, deductible caps, lienholder listing, and what happens if coverage lapses — is covered in do I need full coverage insurance for a car loan.
Two consequences for the cost side specifically.
The deductible is a lever with a limit. Raising it lowers the premium and raises what you owe out of pocket after a claim. On a subprime budget, a deductible you could not produce in cash tomorrow is a future problem bought to solve a present one.
Insurance pays what the car is worth, not what you owe. On a loan with little down at a subprime rate, those two figures are far apart for years. Closing that gap is a separate purchase — see gap insurance and whether you should buy it — and it is worth pricing independently rather than accepting the finance office's version.
How do I lower the premium with a weak credit file?
By shopping several insurers and choosing the vehicle with the premium in mind, because those are the two levers that move the number most while the credit file is what it is. None of this is credit repair — nobody can remove accurate information from a credit report.
- Quote the specific vehicle before you buy it. Premiums vary between two cars at the same price more than most buyers expect. A model with expensive parts or a poor theft record can cost noticeably more to insure than one sitting next to it on the lot.
- Shop more than one insurer. The weight given to credit-based insurance scores differs between companies, so the same file produces different quotes.
- Ask about every discount you might already qualify for — multi-policy, defensive driving, low mileage, telematics, employer or association affiliations.
- Raise the deductible only to a level you could actually pay in cash tomorrow.
- Improve the credit file over time. Where insurers use these scores, the same work that moves you up a lending tier tends to help here too. Paying down revolving balances is the fastest-moving item on both sides.
- Re-shop at renewal. The quote that was best when your file was weakest is often not the best one twelve months later.
What to do before you sign
1. Get a real quote on the exact car, with the VIN if possible, before agreeing to buy it. 2. Add the quote to the loan payment and check the total against your actual take-home, not your gross. 3. Confirm the coverage the lender requires, including limits and maximum deductible, and make sure your quote matches it. 4. Have coverage bound before delivery. Nothing is delivered without proof of insurance, and arranging it at the last minute is how buyers end up on whatever policy can be issued in twenty minutes. 5. Re-check the premium against your budget if the deal changes at the desk. A different vehicle means a different quote.
For the loan side of the budget, see rates by credit score and what the average car payment actually is. For lowering the amount financed in the first place, see how much down payment to make.
Common questions
Does bad credit make car insurance more expensive?
In most states, yes. Insurers there are permitted to use a credit-based insurance score in pricing, and weaker credit generally produces a higher premium. A small number of states restrict or prohibit the practice, so the answer depends on where you live.
Is a credit-based insurance score the same as a credit score?
No. It is a separate score built from credit report data and designed to predict insurance claims rather than loan repayment. It is also not the FICO Auto Score an auto lender pulls, so three different numbers can come from the same credit file.
Will my premium drop if my credit improves?
Where insurers use credit-based insurance scores, generally yes, but not immediately and not automatically. Rates are set at issue and at renewal, so the practical move is to re-shop at renewal once the credit file has improved rather than waiting for a reduction to arrive.
Do all insurers weigh credit the same way?
No, and that is the reason to shop. Each company files its own rating plan, so the same credit file can produce noticeably different quotes. One quote tells you almost nothing about what the same car costs to insure elsewhere.
How do I budget for insurance before I buy?
Get a quote on the exact vehicle, with your own driver details and ZIP code, before you commit. On a $15,000 loan at 18.86% over 60 months the payment is $388 a month; the premium is a separate figure, and only a real quote tells you what it is.
Does checking insurance quotes hurt my credit?
An insurance quote generally involves a different kind of inquiry than a lender's hard pull and does not affect your credit score the way a loan application can. Confirm with the insurer, and shop quotes freely.
Sources
- Average Car Loan Interest Rates by Credit Score — Experian
- Auto Loans Research Reports — Consumer Financial Protection Bureau