Subprime Auto Loan
A loan made to a borrower with a credit score below ~620. Higher interest rates and stricter terms.
Why it matters
Subprime auto loans are made to borrowers with FICO scores below ~620. APRs are typically 10-25% (vs. prime tier at 4-8%). Subprime loans often require a larger down payment, shorter term, or co-signer, and may include GPS tracking devices for repossession. The subprime auto market is heavily regulated post-2008 due to predatory practices (yo-yo financing, spot delivery, forced add-ons). If you're shopping subprime, get pre-approved through a credit union before visiting a dealer — credit unions offer dramatically better subprime rates than dealer-arranged loans.
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