Ford’s Bold Gamble: Offering Low Rates to Subprime Ford F-150 Buyers
The Ford F-Series remains the bestselling vehicle in the U.S., but even kings sometimes need a boost. Sales of the F-Series dipped by 3.4% in August, pushing Ford to try a bold new tactic to boost sales before the quarter ends. The automaker is now offering buyers with lower-than-top-tier credit (known as subprime borrowers) the same low interest rates as those with spotless credit. This is a significant risk, as typical subprime interest rates can climb up to 16%, compared to the 5% offered to prime buyers.
A Game-Changer for High-Risk Borrowers
This promotion is a potential game-changer for many shoppers. A spokesperson for Ford told The Wall Street Journal that the company wanted to give customers with credit scores that are “not perfect” a fair shot at the best rates available. For a truck costing up to $80,000, the difference between a 16% and a 5% rate can translate to hundreds of dollars a month in savings. This promotion is scheduled to run only until the end of the month.
Ford Insists It’s a Calculated Risk
While lenders typically charge more for subprime borrowers due to the higher risk of default—a risk that is worsening as unemployment rises and delinquency rates hit post-COVID highs—Ford insists it isn’t taking unnecessary chances. The company’s finance arm uses a proprietary scoring model that looks beyond the standard FICO credit score to ensure borrowers have the capacity to pay. They stressed that promotional rates do not factor into credit decisions; they only finance customers deemed creditworthy.
The Ultimate Test of Value
Industry experts agree that a low rate can significantly help buyers afford the high monthly payments associated with the F-150. However, consumer advocates caution buyers to look past the attractive interest rate. The ultimate test of whether a vehicle is a true bargain depends on the final price, including the sticker price, dealer add-ons, and the value given for a trade-in. If the total cost is too high, a low rate won’t solve the core affordability problem.
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