Subprime Auto Loans On the Rise For Unwary Car Buyers Skip to main content

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Subprime Auto Loans On the Rise For Unwary Car Buyers


While many Americans learned a harsh lesson during the economic recession—turning away from reckless spending in an attempt to increase much-needed savings and avoid high-interest consumer debts—auto lenders still did well during the downturn, as demand for cars remained high and auto loans became one of the very few types of consumer debts that grew even as consumer confidence dwindled.

In this auto-lending boom, more and more subprime lenders are popping up on the scene, willing to take advantage of a credit-ravaged consumer’s need for a new or used car.

Take for example Ally Financial, Inc. As Reuters is reporting, the largest American auto lender is making bank on many an unwary consumer’s automobile buys.

“Ally Financial Inc, the United States' largest maker of car loans, hopes that people have forgotten the time when "subprime" became a synonym for ‘disaster.’ Ally, once known as GMAC Financial Services, is getting ready to go public this year, and is making the case that subprime loans for used car buyers are not about to produce the same results that they did in the housing market a few years ago -- a near-collapse of the financial system… The company is making more loans to subprime borrowers, and financing more purchases of used cars, both steps with higher risk. It has said it wants to raise the percentage of auto loans on used cars that it makes to 50 percent from its current 20 percent.”


This type of business model remains very attractive today, because “[p]rofit margins on the loans more than cover the cost of expected losses from borrowers who fail to repay.”
So, if you’re facing bankruptcy, exiting the process, or even just trying to get back on your basic financial feet, you can still be targeted by these savvy subprime lenders, awaiting consumers with short memories about the dangers of this high-interest arrangement. In truth, car lenders, mortgage financiers, credit card companies and more, often line up for the chance to provide all sorts of debtors with all types of consumer spending opportunities.

Often, these same lenders are also coming forward to capitalize on the clean financial slate your bankruptcy provided.  Unfortunately, many of these so-called “helpful” creditors are actually subprime lenders targeting average Americans just like you who are attempting to improve their credit and get back on their financial feet.

As a result, regardless of your situation you should beware quick credit offers and avoid subprime lenders by following a few easy tips to stop the cycle of debt and get back on a better budgetary track:

Carefully Read Your Credit Report
If discrepancies appear in your report, rectify them by contacting your credit bureau and calling attention to the errors. The power of an accurate credit report post-bankruptcy cannot be understated: fewer debts; higher credit scores; attracting higher quality lenders for better credit offers…and not subprime sabotage!

Pay Your Bills
Improving your credit post bankruptcy is as easy as paying all of your bills, all of the time, on time. From car loans to utility bills, anything that you kept and continue paying for, on time, reflects a positive payment history and a better credit report. These small fiscal steps can improve your credit rating and provide more wiggle room to work with better lenders in the long-run.

Read Everything
Even infrequent use of credit cards can cause serious financial woes if you don’t read the fine print. To avoid unwieldy interest rates and fees, carefully read all terms and conditions when applying for credit.

If you’ve already succumbed to subprime loans, there’s never been a better time to contact a qualified bankruptcy attorney that can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure fiscal future. The bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at Simply click on the yellow “FREE Consultation Now” button.

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