With more consumers falling into lower credit score tiers, subprime auto loans with high interest rates are their only option most times to buy a car. Some dealerships are realizing the need for more options for shoppers with bad credit, and are opening dedicated used car centers for these nonprime customers, WardsAuto.com reports.
And although getting lenders to fund subprime car loans for customers with not-so-perfect credit remains an issue for some, it is not the biggest problem for some used car departments.
"Subprime is not as crucial for us as the shortage of decent used cars," Ed Rykulski, used-car manager for the Al Serra Auto Plaza in Grand Blanc, Mich., told WardsAuto.com. "The fact that owners and fleets are keeping their units longer is a real problem. We employ 18 salespersons in the sales center and buy heavily at the auctions to keep sales at 2009 levels, when we sold 3,212 used units."
Subprime auto loans helped the used car department at C&O Motors, WardsAuto.com reports. Rick Rexroad, used car manager of C&O Motors, said a local surge in subprime customers helped his used car department bring in $56 million in revenue last year.
Although some car shoppers’ credit scores have tanked during the recession, people still need reliable transportation to and from work or school. Subprime car loans could be the answer to help these consumers.