Bad-credit auto loan borrowing for used cars in full swing

bad-credit auto loan

Bad-credit auto loans are part of the reason for recovery of car, truck and SUV sales through last year and into 2014.*

That includes used-vehicle sales, which make up a large portion of the market.

“The ability of subprime customers to obtain vehicle financing helped the used-vehicle industry finish [2013] on the upswing as December capped an overall great year for the pre-owned market and pushed the full-year sales total above 40 million units,” reported SubPrime Auto Finance News.

Used-car sales closed 2013 at just under 42 million units, CNW Research reported.

An improving economy and the need to replace decade-old cars are driving much of the demand,” according to Investor’s Business Daily online. “But easier credit is making much of this possible.” Interest rates remain at near-historic lows, said Financial Times online.

New-car sales were around 15.6 million in 2013, Kelley Blue Book estimated, less than 30 percent of total vehicle sales. Meanwhile new-car sales are expected to top 16 million in 2014.

“Although lending to those with troubled credit histories may sound dubious in the wake of the subprime [mortgage] crisis,” Investor’s Business Daily reported, “experts said another cataclysmic financial meltdown is unlikely, given the differences between the housing and automobile markets.”

“It’s in a controlled, reasonable way so far,” said Lacey Plache, chief economist at Edmunds, an auto industry research firm. “It’s not any cause for alarm.”

Subprime mortgages – bad-credit loans – were blamed for the financial crisis that caused the Great Recession.

“Nonprime, subprime and deep subprime loans comprised 55 percent market share for used cars and trucks in Q3, up from 54.5 percent in the year-ago quarter,” according to Experian Automotive. “Nonprime, subprime and deep subprime new auto loans made up 26 percent of all new-vehicle financing in Q3, up from 24.8 percent in the same quarter in 2012.” So, used car loans are possible for qualified applicants.


* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press),,, Investopedia, and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.


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