When it comes to car choice for borrowers with iffy credit, pricing is only one factor that comes into play. Consumers must also consider long-term financial commitments tied to the vehicle, like cost of repairs, gas mileage, and insurance.
With those criteria in mind, CarFinance.com has compiled a list of the most economical car purchases for subprime buyers. Here’s the ranking:
- Toyota Corolla
- Toyota Matrix
- Honda Civic
- Nissan Altima
- Honda Accord
It’ll be interesting to see how this list evolves now that Chrysler Capital is on the scene. Backed by subprime lender Santander Consumer USA, Chrysler Capital has plans to grow new-car sales to consumers in the subprime space.
Handy list Alexandra, since one of the top 3 reasons subprime borrowers stop paying is the cars stopped running. Note every car on the list is a Japanese-made vehicle – known for their mechanical capacity to travel 200,000 plus miles with little more than new wipers and tires. BHPH & LHPH dealers should take note. The other top reason for not paying? Umm..that would be job loss. That’s why subprime (thin file) auto loans to lower-ranking military and foreign students are “hot hot hot”. Anyone know the 3rd reason a subprime buyer stops paying?
Aside from the Corolla, always a default choice for reliable transportation, this is perhaps not the most inventive list for those looking for a bargain, in my opinion (and it’s only an opinion!).
Many of these cars are fairly expensive, though as Chas notes, all are reliable long-term cars. It seems to me that many subprime buyers are buying on price – they can finance a new car on better terms than a used one, but the higher price means they have less money to spend. I think focusing on the really good cheap entries available now would have been a better tactic.
This list represents something of a barometer of how industry consolidation and improving quality standards have changed the market. In 2003, most buyers with iffy credit who absolutely had to have a new car were limited to a fairly narrow field – mediocre cars that were cheap (Chevy Cavalier, Mitsubishi Lancer, Dodge Neon, Hyundai Accent), or a declining number of better cars that were sometimes badge-engineered and sold by affordable brands for a discount (Chevy Prizm), or heavily incentivized larger vehicles (Oldsmobile Alero, Ford Taurus).
Today there are fewer brands and some of those which might have been thought of as bargain-bin fare, like Hyundai, are today really good brands. Almost all the manufacturers are producing better, more durable product and the real bottom feeders are gone.
Chrysler would be in a good position in this market with the new Dodge Dart – a car which gives its dealers a vehicle that is at class parity for the first time since the 1990s (when the original Neon debuted) and which offers considerable value and performance for its low price – which undercuts the Civic by about $2K in basic form. If the mechanical abilities of the Dart are prologue, it should fare far better as a long-term proposition than the car it replaced – the late, un-lamented Caliber.
Other noteworthies that might attract attention from these buyers:
Nissan Note (just launched in the USA), Ford Fiesta, Kia Rio 5, Forte, & Soul, Mazda2, and for this year, the Mazda3 – a really good car which is due to be replaced and therefore likely to be discounted.
The 3rd reason subprime borrowers stop paying?
Answer: They made their final payment. (gotcha!)