Another Subprime Auto Lender Stops Originations

Subprime Auto Lender Hits the Brakes and Shifts to Neutral

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Irvine, CA – November 3, 2025 – In the high-stakes world of auto financing, one California-based player has quietly stepped off the gas. What began as a steady climb through the subprime lending lane has now veered into uncharted territory. The move, confirmed just days ago, sends ripples through dealerships and borrowers alike.

Bayside Credit, a subprime auto finance company founded in 2015, has ceased originating new loans, marking the latest casualty in a turbulent sector battered by rising defaults and economic headwinds, according to industry sources and company statements.

The halt, effective since July 2025, was confirmed to Auto Finance News on November 3. A Bayside spokesperson cited “challenging market conditions” as the primary driver, pointing to persistent inflation, elevated interest rates, and deteriorating performance across subprime auto portfolios nationwide.

“While our existing originations continue to perform well relative to broader market benchmarks, we have paused new indirect auto originations as our current scale does not deliver the unit economics necessary for compelling risk-adjusted returns, especially with current market dynamics,” Chief Executive Nima Mofrad told AFN.

“To position the company for sustainable success in this sector, we are actively engaging with capital partners to build the foundation for pursuing attractive opportunities we expect to emerge in the medium and long term,” he added.

The company, which once celebrated originating over $200 million in loans through a network of more than 800 dealership partners, now faces an uncertain future as it manages its existing portfolio without adding new volume. While no layoffs or closures have been announced, the pause raises questions about the long-term viability of smaller lenders in a segment increasingly dominated by larger, more resilient institutions.

Bayside’s retreat follows a string of high-profile setbacks in subprime auto lending. In September, Tricolor Holdings filed for bankruptcy and began liquidation, leaving major banks exposed to hundreds of millions in potential losses. In addition, Primelend, a Plano Texas based subprime lender filed for bankruptcy in the U.S. Bankruptcy Court just a few weeks later. Meanwhile, Credit Acceptance Corp. reported a 16.5% drop in originations amid rising delinquencies.

Unlike its peers, Bayside has not publicly securitized its loans or disclosed current outstanding balances, leaving the true size and health of its active portfolio opaque. Industry analysts estimate that, given natural amortization and elevated default rates, now hovering above 10% for subprime auto loans, the company’s outstanding book is likely shrinking.

For now, Bayside’s website remains active, promoting account management tools for existing borrowers. Dealership partners have been notified, but many are already shifting to alternative finance sources.

“This isn’t just about one lender,” said Marcus Hensley, auto finance analyst at Kroll Bond Rating Agency. “It’s a symptom of a market that overheated and is now correcting, hard.”

As subprime borrowers face tighter credit and higher repossession risks, Bayside Credit’s decision underscores a broader reckoning in indirect auto lending. Whether the company resumes originations or pivots to servicing-only remains unclear.

For customers with existing Bayside loans, payments and account access continue uninterrupted. But for those hoping to finance a vehicle through the lender in the months ahead, the door, once wide open to credit-challenged buyers, now appears firmly closed.

Sources: Auto Finance News, Bayside Credit corporate milestones, Kroll Bond Rating Agency subprime auto loan reports, Financial Times, company website.

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