With consumer debt at or near record levels and incomes growing hardly at all, Ford Motor Credit Co. is forming a new subsidiary whose strategy is to find customers who haven't qualified through conventional lending channels and take a chance on them. It's called "sub-prime" financing because the borrowers' credit records indicate they may not be able to repay. The incentive for Ford Credit: charging
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With consumer debt at or near record levels and incomes growing hardly at all, Ford Motor Credit Co. is forming a new subsidiary whose strategy is to find customers who haven't qualified through conventional lending channels and take a chance on them. It's called "sub-prime" financing because the borrowers' credit records indicate they may not be able to repay. The incentive for Ford Credit: charging a higher interest rate and selling vehicles that might otherwise sit on dealers' lots. Remember those 60-month loans from the mid-'80s that left many buyers unable to trade in because their cars were worth less than their unpaid balance? Could this be deja vu?
