The Auto Industry Warns New-Car Buyers With Subprime Credit

How about good and suitable used cars? This is the invitation that the American auto industry has for those new-car buyers with a subprime credit score. Jonathan Smoke, chief economist for Cox Automotive Inc., at the American Financial Services Association annual Vehicle Finance Conference, on February 26 got to the conclusion that the new car industry niche is getting smaller over the time; it targets certain type of buyer and it gives a significant amount of attention into the credit profile of the prospective costumer. Although it is true that the business offers vehicle options from every size, color and design; subprime credit score will not be a beneficial aspect in any new car purchase, that is for sure.  

Smoke also talks about the commonly held belief that there is a new car for any budget or any situation; unfortunately, it is not as ideal as it sounds. In many cases, buying a brand-new car is not the best option and that is okay. Obtaining a used vehicle does not mean you are compromising quality nor safety; opting for secondhand cars can avoid stretching to stay up to date with unnecessary and unsustainable payment plans. 

According to Experian Automotive, all credit scores underneath six hundred are considered to be subprime. Over the pass of time, subprime customer numbers keep going down; in fact, today, that type of customer does not reach ten percent of the auto sales. At the same time, prices keep getting higher and the production of less expensive vehicles is decreasing. Cox Automotive stated at the online conference held recently “We essentially no longer have entry-level vehicles in the new-vehicle market.” Because of that, used cars are literally becoming the new entry-level vehicles, only those that are certified and are resold legally, of course.  

It is very probable that the global pandemic might have been one of the top influential factors in this change on the market; however, automakers are taking measures that are beneficial for them as a business, but also for the consumers that expect some needs to be fulfilled when it comes to buying a vehicle. Reinvention has been needed and most of the biggest automakers are still making decisions about the issue, some are still taking in the fact that subprime buyers could be out of the business.  

Credit history and performance will remain important, and it is imperative that any shopper on maintain the right amount of credit to take over an existing lease.