If you are in the market for a loan, it is important to know your options. Loans with the most favorable repayment terms are typically given to those with the best credit ratings. However, this does not mean a person with a few dings to their credit cannot obtain financing. Alternative forms of lending are available, many of them through a subprime lender. Before agreeing to take out a loan with a subprime lender though, check around and know the facts.
Subprime lending is defined as a loan that is made at an interest rate above the prime rate. Reasons why a lender might offer a subprime loan include:
● Poor repayment history, or too many delinquent accounts on your credit.
● A low credit score.
● A foreclosure or bankruptcy appearing on your credit.
● A history of late payments.
If subprime loans are offered at higher rates, you might be wondering why it would be beneficial to agree to these loans. The answer depends on your circumstances. If you are fresh out of bankruptcy, a subprime loan can be a good way for you to being rebuilding credit. This is, of course, provided you make timely repayment and don’t default on the note. A subprime loan may also have a rate that is actually lower than some credit card rates. If that is the case, this type of loan can be used to pay off the higher rate card and actually end up saving you money in interest. As with all lending, the key is to find a loan that fits your budget, and to stick to your budget. If your credit is less than perfect, and most people’s credit falls into this category, a subprime loan may be your ticket to getting the funds you need for emergencies and the necessities of life. After a history of good repayment on a subprime loan, your credit can improve to the point where you begin qualifying for more traditional loans. When that happens, you are able to keep more of your hard earned money in the bank and can begin building a nest egg for your financial needs rather than taking out any loan.
If you have questions about subprime lending, let an experienced attorney help you. Call a Plantation, Florida debt relief attorney today for more information.