Sub-prime auto loans

A subprime auto loan is a loan made to someone with limited or poor credit history, or low income, so that they can buy a vehicle. Because the borrower’s credit history or income might be seen as a bigger risk that the loan will not be paid back, a subprime auto loan will have a much higher interest rate (and usually higher fees and longer payment terms) than a regular auto loan.

Lenders and vehicle dealerships might not call their loans “subprime loans”. Usually, an easy way to identify a subprime auto loan is if it is being offered specifically to people with poor credit, no credit, or low incomes. A low interest rate might be advertised, but that does not mean that everyone will qualify for such a rate.

Subprime auto loans are expensive and risky. Most vehicles will decrease in value after they are bought; meaning that the amount of the loan is more than the vehicle is worth. If you don’t pay back an auto loan, the lender might repossess your vehicle – this could mean losing your transportation to work and other places, and losing the value of your vehicle.

If you are thinking of getting a subprime auto loan, there are things to think about, including any other options that might be available to you. Remember that you have rights when getting a loan.

If you decide to get a subprime auto loan, read the loan agreement very carefully before signing it. The salesperson or lender might tell you that the interest rate could be reduced in the future. That does not mean, though, that it will be reduced. Make sure all the loan terms, including any future interest rate reductions, are in writing before you sign the agreement.

Who can I talk to if I have concerns about a subprime auto loan provider or a subprime auto loan?

Although subprime auto loan providers do not need to be licensed in British Columbia, they must still operate in a fair way and in accordance with B.C.’s consumer protection laws.

If you have concerns about a Subprime auto loan or loan provider, you can contact Consumer Protection BC at or 1 888 564-9963 (toll-free).