Subprime Car Buyer Trends
According to a recent Experian study, between 2019 and Q4 2020, auto financing debt reached an all-time high of $1.37 trillion. Despite changes in consumers’ daily travel and commutes, the auto financing market grew at roughly the same rate — six percent — as it had in previous years.
“Perhaps one of the most unexpected trends was that delinquencies didn't rise significantly during the pandemic, though we know that a variety of accommodation programs, along with stimulus packages, likely helped keep them down,” said Melinda Zabritski, Experian's senior director of automotive financial solutions.
So, how does the steady increase in U.S. auto financing tie in with current subprime car buying trends? According to recent studies:
- Nearly 30% of consumers have a subprime credit score
A 2021 Experian report found that one in three U.S. consumers have a credit score in the subprime range which, according to Experian, is all consumers with scores of less than 670 or those in the “poor” and “fair” FICO® Score ranges. Subprime car buyers typically are more susceptible to getting denied by traditional lenders and finance companies.
This means car dealerships that don’t offer subprime auto financing are turning away one in every three potential car buyers that walk into their dealership because of their credit score. Enrolling in the Credit Acceptance program gives your dealership the ability to approve every customer regardless of credit history. Learn more. - 22% of American consumers do not have a FICO credit score.
According to a recent report by the Consumer Financial Protection Bureau, 11 percent of Americans have a “thin or stale” credit file (making it difficult to generate a valid FICO credit score for them) while another 11 percent are considered “credit invisible,” meaning they don’t have a credit file with any of the three major credit bureaus. Consumers with limited or no credit history are another group that are more likely to get turned down by traditional auto lenders and finance companies. Offering subprime financing through the Credit Acceptance program will position your car dealership with the ability to approve car buyers with bad credit and no credit. Learn more.
If your car dealership is looking for ways to reach subprime car buyers with bad credit or no credit, enrolling in the Credit Acceptance program gives your dealership the ability to say ‘YES’ to everyone regardless of credit history.
Simply fill out the form on our website to learn the benefits of becoming an enrolled dealer in our dealer finance program!
