How Do You Determine Interest Rates On Subprime Loans?
Subprime loans are given to those who cannot fit the requirements for prime rate financing but do qualify for more strict terms. Most people who qualify for these loans are people who have low credit scores, though some very low scores will not qualify for subprime loans. Borrowers who would like to purchase a home or other assets with lower credit scores pose a larger risk to lenders, which causes interest rates to be higher. Determine what your credit score is and if you qualify for prime rate financing or subprime rate. Many borrowers qualify for prime rates through some lenders, which is why it is often helpful to work with a lender offering both types of loans. Credit scores under 600 generally are considered to be low, but some may fall into prime loan rates, depending on the lender’s requirements. Realize that subprime lenders select the interest rate they will charge to borrowers based on the company’s lending criteria, which often changes from one organization to the next. Len
