Subprime auto loans are vehicle financing products tailored for consumers with damaged, limited, or low credit scores (typically FICO scores between 500 and 600, or Deep Subprime under 500).
Because lenders assume significant credit default risk, subprime loans differ from prime loans in several critical ways: - Elevated APRs: While prime auto rates range from 5% to 8%, subprime auto interest rates frequently range from 14% to 22%+. - Stricter Income Verification: Demands mandatory paystubs, utility bill proof of residence, and personal references. - Collateral Safeguards: Many subprime lenders require GPS tracking units or Starter Interrupter Devices installed in the vehicle to facilitate prompt repossession upon non-payment.