Consumer Portfolio Services auto loans review: Expensive 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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Editors’ take: Consumer Portfolio Services offers auto loans only through select car dealerships. You can get a CPS auto loan even if you have bad credit, a limited credit history or low income. But in exchange for higher approval odds, you’ll likely pay a double-digit interest rate on your loan.


CPS auto loans at a glance

Starting APR Higher than many lenders
Loan amounts $10,000 to $25,000 through mailed offers; loan amounts available through dealerships not disclosed
Loan terms Up to 72 months
Minimum credit scores required No minimum
Loan fees Not disclosed on website
Prepayment penalty No
Availability Available in 48 states
Ability to apply for prequalification or preapproval? Yes, preapproval via mail
How to apply Through a dealer
Other requirements ●      Minimum monthly income of $1,800 from a single source
●      Down payment of at least 10% may be required
●      Vehicle payment can’t exceed 15% of gross monthly income

Pros

Cons

  • Limited loan options
  • Interest rates may be high
  • May require a hefty down payment

What you need to know about CPS auto loans

Consumer Portfolio Services is an indirect auto lender, which means you can only get a CPS loan through a dealership that partners with the lender. CPS works with both franchised and independent automobile dealerships. Here are some of the more important things to keep in mind if you get an offer from CPS.

Loan options are limited

CPS only offers financing for late-model used vehicles and some new vehicles. If you want an auto refinance loan, lease buyout loan or private party loan, you’ll need to look elsewhere.

Considers people with bad credit and no credit

It can be challenging to finance a car purchase if your credit is shaky. But CPS specializes in working with people who have past credit problems or haven’t had a chance to build their credit history yet.

In fact, the finance company doesn’t even specify a minimum credit score requirement to qualify for a loan. CPS also considers people with lower incomes and those who have filed Chapter 7 and 13 bankruptcies.

In some cases, CPS may mail you a preapproval letter, which means that you may qualify based on information the company found in a soft credit check. That said, the offer is only valid at participating auto dealers in the lender’s network and doesn’t guarantee approval.

Interest costs can be high

Auto financing for bad and limited credit histories is generally more expensive than if you have a solid credit history, and that’s no different with CPS auto loans.

For example, let’s say you get a $10,000 loan with a 60-month loan term and a 24.95% annual percentage rate, or APR. Over the course of those five years, you’d pay about $7,593 in interest — more than 75% of the original loan balance. An online auto loan calculator can help you estimate how much interest you may pay on a car loan.

Also, CPS may require a minimum down payment of 10%, which can make it difficult for cash-strapped borrowers to finalize a deal.

Common question: Where is Consumer Portfolio Services located?

CPS is headquartered in Irvine, California, and has branches in four other states: Florida, Illinois, Nevada and Virginia. The lender partners with car dealers in 48 states to provide auto loans, but doesn’t offer a dealership finder on its site. If you’re interested in applying for financing from CPS, you’ll need to reach out to dealers to see if they work with the company.

Common question: How does Consumer Portfolio Services work?

CPS only provides indirect automobile financing, which means you need to apply for a loan from the company through a partner dealership. The lender also mails out preapproval letters, but these preapprovals aren’t a guarantee that you’ll be approved for financing. And you’ll be limited to working with a specific dealership — to proceed with the preapproval offer, you must shop that dealer’s lot.

What is CPS Auto Platinum?

Some of the preapproval letters that CPS sends out may include a CPS Auto Platinum Card. You’ll need to bring that card to the specified dealership to begin the financing process.

Not sure if a CPS auto loan is right for you? Consider these alternatives.

  • New Roads auto loans: This lender — the direct lending arm of CPS — may be an option for people seeking a range of loan choices, including refinance or lease buyout loans.
  • MyAutoLoan car loan: This online lending marketplace could be good for people who want to easily gather and compare offers from multiple lenders.


About the author: Ben Luthi is a personal finance freelance writer and credit cards expert. He holds a bachelor’s degree in business management and finance from Brigham Young University. In addition to Cr… Read more.