Credit Score Terrible…No Problem!

In follow-up to our post of May 15, 2013, among Canadians looking to finance the purchase of a new or used vehicle, over one-third are currently not eligible for prime interest financing.

Not an insignificant piece of the car shoppers market by any means. Rifco Inc, TD Non Prime, Scotia Dealer Advantage, and Carfinco are recognized as Canada’s top 4 major lenders of subprime vehicle financing.

A relatively new Canadian subprime player, Canadian Title Loan Corporation (CTL), believes the number of Canadians not qualifying for traditional bank financing has grown closer to 40 percent.

Many blame the growth of sub-prime auto-finance on traditional banks which continue to tighten their lending requirements however, it always takes two to tango.  Irrespective of where the broader economy is in the economic cycle the traditional banks have always had a notorious reputation of only being there to help when you don’t need their help.  It’s always been that way.  So what else has suddenly changed to drive the monumental growth in sub-prime lending over the last few years?

Does Canadians slamming themselves into deeper and deeper debt – at lower and lower levels of credit quality – to attempt to maintain their exuberant iPad-eating lifestyles in this culture of buy now – pay later have anything to do with it?

Onward and upward leverage… what could go wrong.