Consumer Portfolio Services auto loan review: Subprime auto loans through dealerships

Young woman in a flannel shirt sitting in her car and looking out the windowImage: Young woman in a flannel shirt sitting in her car and looking out the window

In a Nutshell

If you have bad credit and you go to a dealership to buy a car, some dealerships may try to get you a loan through a company like Consumer Portfolio Services. Consumer Portfolio Services works with dealerships — not directly with consumers — to provide auto loans to car buyers with past credit problems, minimal credit history or low incomes. The company is a subprime auto lender, which means its focus is lending to people with rough credit. But be warned: The cost of this kind of loan can be high.

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Pros Cons

Auto financing for eligible applicants who have credit problems, low income or limited credit history

Works directly with dealerships, not with individual consumers — which means you’re somewhat removed from the lending process

Loans for new and used cars

High interest rates

What to know: Consumer Portfolio Services auto loans

Consumer Portfolio Services is an indirect auto loan lender. Rather than working directly with prospective car buyers, Consumer Portfolio Services partners with dealerships to extend loans to eligible applicants with bad credit. This may seem great, but keep in mind that you can end up paying a steep price when borrowing from a subprime auto lender that targets people with credit issues.

While Consumer Portfolio Services works only through auto dealers, it does have a lending arm called New Roads that works directly with consumers.

Financing for shaky credit

It’s important to be aware that lenders targeting people with not-so-great credit profiles usually charge higher interest rates and fees. This is because lenders typically consider someone with dinged-up credit to be a greater risk.

In addition, when a car dealership finds a loan for you through a finance company like Consumer Portfolio Services, it’s the dealer and the finance company — not you — that’s arranging the loan. That means there’s room for the dealer to potentially add its own markup to the mix, driving your costs up higher.

A closer look at Consumer Portfolio Services auto loans

One more thing to keep in mind is that when a dealership submits your info to Consumer Portfolio Services to apply for a loan, the company will pull your credit reports to determine eligibility. This is known as a hard credit inquiry, which can negatively impact your credit scores.

Is a Consumer Portfolio Services auto loan right for you?

If you have bad credit and the dealership you’re shopping with has a relationship with Consumer Portfolio Services, you may be able to get an auto loan from the company.

But interest rates can be high and your loan may cost you even more if the dealership adds its own markup. Even if you have bad credit, a loan like this may not be your only choice, though. You might want to consider trying to get prequalified with a number of other lenders so you can compare other options. While prequalification isn’t a guarantee for loan approval — you still have to formally apply — it can give you a pretty good idea of other choices you may have.

How to apply for an auto loan from Consumer Portfolio Services

Consumer Portfolio Services works directly with dealerships — that means you can’t apply directly with the company. Keep in mind that if you go to Consumer Portfolio Services’ website and find your way to its Car Payment Calculator link near the bottom of the home page, a click will redirect you to a calculator on the New Roads website. You can use that car payment calculator to estimate terms for a New Roads loan — not for any CPS loan you might get through a dealer.

To learn more about New Roads, read our New Roads auto loans review.

Not sure if Consumer Portfolio Services is right for you? Consider these alternatives.

If you have less-than-ideal credit, make sure you understand the hidden risks of subprime lending before you apply for a car loan — either directly or through a dealership that works with a company like Consumer Portfolio Services. Here are some other options to consider.

  • Tresl: If you’re looking to refinance your car and want to apply for prequalification before formally applying, Tresl might be a good option.
  • MotoRefi: MotoRefi may be an option for borrowers with fair credit who want to refinance their current auto loan.

About the author: Ashley Chorpenning is a personal finance writer and content creator. In addition to being a contributing writer at Credit Karma, she writes for solo entrepreneurs and Fortune 500 compani… Read more.