Auto Loans
In Auto Financing, subprime lending means making Loans to people who may have difficulty maintaining the repayment schedule.
Subprime Lending helps allow people with bad or poor credit also get a car loan, otherwise not have access to the credit market. Professor Harvey S. Rosen of Princeton University explained, "The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated-against, the people without a lot of money in the bank to use for a down payment."
Subprime borrowers might include:
- limited debt experience
- no possession of property assets that could be used as security
- excessive debt
- a history of late or sometimes missed payments so that the loan period had to be extended
- failures to pay debts completely (default debt)
- any legal judgements
- bankruptcy
- poor credit
- bad credit
- good credit