December 15, 2013
Subprime Personal Loan Lenders Offer Perfect Solution for Low Credit Borrowers
Lenders of subprime personal loans are an ideal choice for the ones with a bad credit history or those with experience in bankruptcy, foreclosures in the past. The borrowers of this nature don’t offer loans from the Frontline lenders and banks. The subprime lenders specialize in lending to the borrowers with bad to worse credit scores. However, the rate of interest offered on these loans is extremely high and ranges between 7-15% at times. In fact some of the personal loans for people with bad credit lenders even ask for the collaterals.
Gone are the days when the sub-prime lenders would offer loans to the individuals without looking at their credit records or their financial documents. Subprime crisis resulted in huge losses to the lenders and hence any loan that is approved by the subprime lenders has to undergo a complete evaluation and underwriting process. The lenders require all the relevant documents from the borrowers which are related to their banking, past history, defaults, settlements, consolidation or bankruptcy if the individuals have faced the same.
However, borrowers have little choice left with them and have to comply with the requirements of the lenders. They also need to compromise on the loan terms especially interest rates and the tenure offered. Apart from this, if the loan amount demanded is more, the subprime lenders may ask for the collaterals too.
Here are a few tips to help you.
Before a personal loan lender is chosen, it is important to have a look at the various terms and the fee structure of a loan agreement. It is a better idea to have a careful comparison of the interest rates and cost of more than three of the lenders. This is helpful as terms of these loans are found to be different among lenders and one can get the best deal among them.
· One should not be obliged to the lenders to the extent that they do not ask them for the clarity on the terms and conditions of the loan. In fact one should ask for a written commitment or ask them to mention all the terms discussed in the loan agreement
· One should clarify the repayment terms with the lenders. Penalties and extra fees on payment delays can be negotiated with the lenders.
· Some of the lenders do not take any pre-payment charges from the borrowers.
The most important benefit of the personal loan lenders is that they provide the loans to people without differentiating them on the basis of credit score. Even though the rate of interest is high, the lenders offer greater flexibility and support the borrowers repay their loans. Subprime lenders do not accept the application on the basis of the applicant’s income or the financial status.
High interest rates, higher penalties are amongst the major drawbacks of these unsecured personal loans. There are fewer regulations related to the operating guidelines for the subprime lenders which becomes a major concern if you fail to repay the loans and the lenders take the help of the collectors of their choice. Subprime lenders often require collaterals of considerable value in order to approve the loans.
It is hence regarded that a proper comparison and analysis of the facts is the best way or solution when applying for subprime personal loans.