Automotive News reports Chrysler owes some of its recent sales success to a resurgence of subprime loans. Chrysler has a history of working with customers burdened with questionable finance histories, and lenders have begun to loosen credit restrictions. As a result, 29 out of every 100 auto loans for new Chrysler models went to buyers with a credit score under 680 in the first quarter of this year. Experian Automotive classifies loans tied to that credit score as subprime. What's more, nearly 21 percent of Dodge sales through May went to buyers with annual interest rates of 10 percent or more on an average term of 71 months.

The report says that on the whole, just eight percent of all new car loans have interest rates of 10 percent or more. Even so, Chrysler's sales are up 33 percent through the first five months of 2012, besting the industry average by around 20 percent. On the whole, Automotive News reports subprime lending in the new car market has returned to its pre-recession levels.


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    • 1 Second Ago
  • 57 Comments
      Emilio
      • 2 Years Ago
      Hyundai and Kia are the worst offenders. They are at 31%.
        Zoom
        • 2 Years Ago
        @Emilio
        But they're darlings around these parts. Hush.
      Walt
      • 2 Years Ago
      Compared to? This story means little unless we are also shown what percentage of other automakers are also writing sub-prime auto loans. Dig deeper Autoblog.
      Don G
      • 2 Years Ago
      Is this out of line with the rest of the automakers? Pretty meaningless stat without knowing what the avg score is with other companies. Since Ally is Chryslers finance company and GM's I would imagine their percentages are very similar. Would be suprised if Hyundai, Nissan, Toyota, etc had vastly different financing demographics.
      • 2 Years Ago
      [blocked]
        Bruce Lee
        • 2 Years Ago
        What are you talking about, you can easily have a 750+ with no job at all, you just have to actually pay your bills on time and your credit score isn't linked to your assets at all other than the fact that having an on-time paid mortgage boosts it a little bit. My net worth is in the negative six figures and my credit score is over 780. The vast majority of Americans are not subprime borrowers at all, quit making crap up.
      throwback
      • 2 Years Ago
      "On the whole, Automotive News reports subprime lending in the new car market has returned to its pre-recession levels." is any one surprised? dealers will always get you into a car.
      REMUSRM
      • 2 Years Ago
      really?
      Mohammed Smith
      • 2 Years Ago
      "What's more, nearly 21 percent of Dodge sales through May went to buyers with annual interest rates of 10 percent or more on an average term of 71 months." Keeping in mind Chrysler quality issues, will these vehicles even be running in 71 months.?
      artso06
      • 2 Years Ago
      Man....we just don't learn.
      • 2 Years Ago
      [blocked]
        throwback
        • 2 Years Ago
        It's not Fiat's problem. It's the problem of the banks who approved the loans. likely US banks so it's still our problem.
      reattadudes
      • 2 Years Ago
      first of all, when did a FICO score of 680 or less become "subprime"? oddly enough, any other credit reporting agency (and even Experian, up until last year) considered "subprime" to be 540 or less. 540 is the number that has always been used in the car business to indicate a subprime borrower. I'm 58 years old, and have owned over 200 brand new cars. I have NEVER ad a FICO score over 680. why? all of the credit reporting agencies have fits if you don't fit into their "normal" mode. right now, I have four open auto loans, and have had up to eight open auto loans at one time. just having at least three loans open at once cuts my credit score by over 150 points. does this make me "subprime", just because I choose to own a bunch of new cars at the same time, even though each and every one has a perfect payment record? what else is interesting about this "expose" is not a single other auto company or finance institution is even mentioned. in case you didn't know, the worst "offenders" of approving subprime loans are the captive credit companies, like Ford Motor Credit, Nissan Motors Acceptance Corp, and Toyota Motor Credit Corp, and two more big ones that I'll mention later. the captive lenders like the ones mentioned above are direct subsidiaries of the manufacturers themselves, and their credit granting standards are quite liberal to say the least, with usually just a "breath test" (will it fog a mirror?) to make you a happy new owner. the captives are there is strictly "move the metal" for their respective manufacturers. did you notice I didn't mention GMAC and Chrysler Financial? they don't even exist anymore. that fact alone kind of takes the wind out of this silly story's sails altogether. perhaps it might carry just a little more credibility if other average scores from ALL auto credit grantors were mentioned. they will be exactly the same, since Chrysler doesn't have a captive finance company, and the finance sources like ALLY Bank are used by other auto companies, too. and where should you head if your credit is REALLY bad? BMW and Mercedes-Benz. I have a friend that is a general manager at a large BMW dealer, and they regularly get customers approved with 480 FICO scores on a lease. again, captive credit companies told by the manufacturer to move a lot of units out the door, with these two makes locked in a battle for sales domination in the luxury segment in the US. and the law of averages is on their side. most people pay for two things: where they live, and what they drive. if worse comes to worse, they'll say goodbye to the house. or as a very wise friend told me many years ago when I first got into the car business, "you can live in a shack, but once you leave, all anyone sees is that nice car you're driving".
        MJC
        • 2 Years Ago
        @reattadudes
        I am not sure what circles you roll in, but who in their right mind would choose a nice car over a nice house? Who cares what other people think of you while you're on the road? A nice car is nothing more than a luxury, like a nice watch or a nice suit. A house is where you live. Also, why on earth would you carry 8 loans on depreciating assets? If you are willing to throw that much money away, you should be able to afford to pay cash.
          reattadudes
          • 2 Years Ago
          @MJC
          don't know where you live, but here in Arizona, many property values dropped by 90%. would you consider continuing to make payments on a $300,000 home that now had a value of $30,000? why would you spend $1,500-$1,700 per month for a grotesquely underwater mortgage (with an 80% chance its a soon-to-reset adjustable rate mortgage), when you could either buy an identical house down the street for $30K, or rent an identical house for $650 per month? many people chose to walk away. it makes no difference "what circles I roll in"; as a matter of fact, this has absolutely nothing to do with me at all. I've been in the car business my entire life, and I'm merely reflecting what I've experienced in the past 30+ years. why on earth would I tie up over $200,000 in cash for those "depreciating assets", when I can pay $6,000 per month for all of them, and still get interest deductions? ...and if "we weren't concerned what other people think of you when you're on the road", then perhaps we'd all be driving silver Toyota Camrys with gray interiors and silver painted plastic hubcaps, resplendent with an "I love the small timer's bible, Consumer Reports" bumper sticker.
      Avinash Machado
      • 2 Years Ago
      Don't they ever learn from past mistakes?
      helloac
      • 2 Years Ago
      Well at least now they know better than to have their own financial services company... just leave Ally to crash and burn when this backfires.
        CEC
        • 2 Years Ago
        @helloac
        Chrysler isn't approving these loans, Ally is. It will by Ally's own fault when this hits the fan again.
          helloac
          • 2 Years Ago
          @CEC
          i agree, that's exactly what i'm saying.
          Healthy Chap
          • 2 Years Ago
          @CEC
          In theory. In practice the government will step in again and you'll all be paying for it.
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