Subprime Auto Lending: Dealerships and the Changing Economy


Toy car on top of car salesmen envelope.

Consumers are more confident in the economy than almost ever before. The Consumer Confidence index hit an 18-year high in September 2018. More people indicated they felt the economic outlook was good.

In this environment, some people have suggested the end is near for subprime car loans. Others see them as a key factor in economic growth.

What does this mean for car dealers themselves? With more consumers taking on more debt, dealerships are in a prime position to benefit.

An Improving Economy and More Debt

Consumers aren’t necessarily wrong to see the economic outlook as improving. Job growth in the US has been strong, and the economy has also seen gains.

Despite this, Americans are more in debt than ever before. More people are taking on more loans, which has some economists worried.

Nonetheless, consumers seem happy to continue spending as they have been. In fact, many expect to see improvements in their short-term income prospects. This could fuel more consumer spending.

Auto Loans Are Bigger Than Ever

Millions of vehicles are sold every year in the United States. The total number of sales rose in both 2016 and 2017.

Behind the rise in purchases is increasing auto borrowing. Among them are many subprime auto loans, which allow more consumers to buy vehicles. The loans themselves are also worth more on average.

What is a subprime auto loan? Essentially, it’s a loan offered to borrowers with credit scores that fall under 620. These borrowers and those who have limited credit histories are often considered riskier.

Are Subprime Car Loans a Good Thing?

Not everyone sees the recent subprime auto finance news as a good thing.

Along with the increase in loans has come an increase in loan delinquency. Some economists worry that subprime auto finance could be behind the next big crash.

Others, including many banks, see subprime lending as an important factor in economic growth. Without subprime car loans, many consumers wouldn’t be able to make vehicle purchases. In turn, this would depress auto sales.

It’s tricky to find the right balance of subprime auto lending. Too much could tip the economy as in the Great Recession, but too little will stifle economic growth.

Dealers Want Subprime Loan Leads

For dealerships, subprime auto loans are a good thing. Dealers who offer them can bring in a wider range of car buyers. Without them, many consumers wouldn’t be able to buy, leading to declining sales.

The question for dealers isn’t “what are subprime loans,” but “how can they be used to bring in more customers?”

There are services dedicated to finding more subprime auto loan leads for dealerships. More traditional means, such as direct mail marketing campaigns, can also be used.

Find More Leads and Sell More Cars

In this promising economy, more consumers are willing to take on debt. Subprime car loans provide the solution for those who might not otherwise qualify.

A service provider can connect dealerships with the leads they’re searching for. Discover how a service provider can find more qualified leads for dealerships.


Find out how to get FREE leads today!

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