Car buyers never had an easy time finding a decent car loan if their credit wasn't up to snuff. But lately, they're needing more money for a down payment to get into that car and they're staring at higher rates than many would expect.
Lower income workers have been hit hard during the pandemic as they experience big layoffs at retailers or restaurants. And if they've held onto a job, many are clocking far fewer hours under capacity limits designed to halt the spread of the coronavirus.
Many struggling workers are the most likely to be hurt financially by the pandemic, economists say, and the least likely to be able to adjust quickly over time economically.
How struggling households take on debt matters, especially now.
It doesn't mean that subprime borrowers - those with credit scores in a range between 300 to 600 - can't get a car loan.
Many, though, must jump through more hoops, as lenders become increasingly concerned about the economic prognosis for the months ahead.
"The loans they are being offered are less attractive and less workable," said Jonathan Smoke, chief economist for Cox Automotive.
"The terms are shorter, the down payment requirements are larger, and the interest rates are higher, so combine those financial conditions with record high vehicle prices and you get a very unfavorable time to buy," Smoke said.
In fact, Smoke said, loans to subprime borrowers are down the most of any credit category year to year.
Risky credit means more hurdles in 2020