What's a subprime car loan?

I've heard of subprime mortgages, but what about subprime car loans?

Answer
“Subprime auto loans are designed for borrowers with either a low credit score or, in some cases, little or no credit history. Given that the lender is taking on greater risk by lending to someone with poor or no credit, these loans generally come with very high interest rates and substantial fees.
If you find you are in the subprime category of borrowers, the best course of action is to delay your purchase until you have improved your credit score. You can do this by paying down or paying off credit card balances, identifying and correcting any errors on your credit report, and taking out a smaller loan and making payments on time to establish a stronger credit history. This may improve your score enough that you can access better and less expensive car loans. “
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Jim Donaher
Answered on Apr 08, 2021
Jim Donaher is a freelance writer and manager with over 35 years' experience in the insurance, banking, and investment management businesses. He provides expertise on a range of topics and is able to explain complex industry information in layman's terms. Jim is the author of two books, including Call Him, He's Home: A Guide to Prayer for Regular People and Then Larry Smiled, a novel about life, death, accountability, and salvation. Taormina, Sicily is his happy place!
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