Subprime Loans Are Back: More Cars for People Who Can’t Afford Them

Subprime car loans

Maybe we didn’t learn our lesson the first time around.

Maybe lending to people who represent a large credit risk is just the American way. Maybe we’ll just keep cycling through economic ups and downs, recessions and recovery, because we can’t seem to understand that building a recovery on shaky credit will never end well.

People need cars, though, and sometimes they just don’t have those perfect 800 credit scores (or even a reasonably healthy 650) to open a credit account and secure a loan for a pricey new or used car. Of course, it would be better if someone just saved up cash, searched the CarGurus used listings and bought the car that was priced right. Instead, they gobble up offers by banks to finance a $20,000 car when buying a $5,000 car for cash would make more financial sense.

A story at The Detroit News had this scary quote:

“There’s a lot of lenders now that are into the subprime business,” said Jody Lee, sales manager at Taylor Chevrolet. “What used to be a good score at a 650 or 700, now 550 is a good score.”

While it’s good news for dealerships and overall sales numbers, it’s a sign that Americans really haven’t learned much about over-extending themselves with credit. More importantly, it’s a sign that banks will easily revert to risky lending practices that got our country into trouble in the first place.

I’m of the opinion that banks and lenders shouldn’t offer subprime credit loans, though I also see the point that consumers should be able to decide for themselves whether or not to take on more than they can handle. The problem is, most consumers just don’t know. They trust the lender to extend a proper amount of credit only to find out later that they’ve bitten off more than they can chew and can’t handle the payments.

Lenders should be the gatekeepers to financial responsibility, not the reason an entire economy falls into recession.

Buy new and used cars as often as you like, but only buy what you can afford. Agree?


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  1. As usual there are an abundence of those stating the obvious, but none willing to do anything about the abuse. I came vey close to falling for the roose of a new vehicle. Luckily I looked at the fine print. 20% inrest, and 500.00 dollar payments. Where 3% and 300 dollar payments lure you in.Mr. rifith should look at what 5,000.00 get’s you in a vehicle. Here is a novel idea. Show, find, invest in a cure to this mafia lending mantalety, and quit telling us (the consumers) how stupid wen are. Thank you in advance.

  2. You seem to be confused as to how our economy works. It has always been heavily based on exploiting poor people’s desire to live beyond their means by credit. Remember that little blip in 2009 when the economy screeched to a halt? That what is what happens when you won’t lend money to people who shouldn’t be borrowing.

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