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Subprime Set: Top Ten Cars Bought By Those With Low Credit Scores

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Money and car keys

Money and car keys

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You’ve likely all seen the late-night TV ads from used-car lots—pushing loans for which they say anyone with a job can qualify.

But hold on; don't yet sign your life's possessions over on contingency to some guy in a Hawaiian shirt who says he is the bank. Even if you have a blemished credit history and an embarrassingly low credit score, you might fail to realize that you’ll likely qualify for a more conventional used-car loan; and you might even be able to buy new.

Once again, this year, those with below-prime credit—those who’ve maybe put off a purchase for a few years—are expected to account for a big portion of the growth in vehicle sales.

And Americans with credit issues are relying on high-risk, higher-rate financing more than they used to. So-called subprime auto loans (generally, what’s given to those with a credit score below 620) account for about a quarter of all new-vehicle financing—as well as more than half of used-vehicle financing.

Auto loans surging as lenders loosen

As Experian Automotive reported last month, outstanding automotive loan balances increased 11 percent from the last quarter of 2012 to the same period in 2013—at the highest overall rate that the company has seen since it started publicly keeping track in 2007. But fortunately, delinquencies on loans have either stabilized or dropped somewhat.

This past week the finance-marketplace site CarFinance.com released lists of the top new and used vehicles sold to those with below-prime credit scores, and it underscores a key point: That it’s a matter of economics, and those with low credit scores tend to go for vehicles with low sticker prices, or those that are deeply discounted for other reasons.

2014 Dodge Avenger

2014 Dodge Avenger

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The Dodge Avenger and Kia Optima were tied for the most-purchased by below-prime drivers; but CarFinance.com suggests that they’re on the list for quite different reasons. For Kia vehicles, the ten-year or 100,000-mile warranty is a big differentiator for those who have to take out a long vehicle loan—although 2013 Optima models were discounted a bit more than typically for Kias, due to a revised 2014 Optima lineup. Meanwhile, the source calls the Dodge Avenger “an often overlooked mid-size sedan that performs well at a competitive price.” Our more skeptical eye catches this as a model that’s not highly rated within its class on our site, as well as one that’s due to be phased out soon, with the introduction of the redesigned Chrysler 200.

Other cars, like the Chevrolet Malibu, the finance source notes, are on the list because dealerships (and perhaps the automaker) were particularly eager to move 2013 models off the lots in time for a significant 2014 Chevy Malibu update.

The list is based on the company’s full-year data, as compiled through loan applications processed through the site.

Subprime loans can't quite buy a new full-size truck

Over on the used side, what’s particularly interesting that the full-size domestic trucks—the Chevrolet Silverado 1500, Ram 1500, and Ford F-150—occupy three of the five top slots. In each case, they’re vehicles that tend to have higher sticker prices when new, yet ones that are very popular—and among the best-selling vehicles overall.

One final word of caution: Those with below-prime credit pay thousands more over the life of the vehicle toward financing, as compared to those who get current top-credit market rates or those who put more money down. According to the site, nearly 67 percent of the total cost of ownership for these customers is attributed to monthly loan payments.

Here’s the complete list—the top 10 new vehicles bought by those with below-prime credit scores:

1. Dodge Avenger / Kia Optima (tie)
2. Kia Forte
3. Ford Focus
4. Kia Soul
5. Dodge Journey
6. Chevrolet Malibu
7. Chevrolet Cruze
8. Chrysler 200
9. Kia Rio
10. Nissan Sentra

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