Having poor credit won’t certainly stop you from getting a loan. From basic needs like paying for groceries to major purchases such as a house or a car, it’s all possible with loans. Subprime borrowers like you have plenty of ways to tap the loan markets when the need arises.
For Housing and More
You can buy a home even if you have a credit score of less than 620. Subprime mortgages are made to people with impaired credit records. They can be fixed- or adjustable-rate mortgages.
The good thing about a subprime mortgage is the opportunity to refinance to a lower rate. Say, you have improved on your credit along the way, you can eliminate your high-rate loan and replace it with a lower rate one through refinancing.
If you have an existing home loan and want to use your built equity, you can take out a home equity line of credit or HELOC. This second mortgage won’t consider your credit score as much as your home equity, which is the key factor here.
You can borrow up to 80% of your home’s current market value, minus whatever you owe on the mortgage. Being a line of credit, you can access it anytime for debt consolidation, medical bills, college tuition and so on.
For Daily Conveniences
Subprime Auto Loan
If you need to buy a car, you can finance it with a subprime auto loan. Expect rates to be higher than on prime loans. But if it’s any comfort, not everyone gets to enjoy low rates unless someone has a credit score in the 800 level.
It pays to check your loan documents and the fine print to understand the costs and fees of getting a subprime car loan, before signing anything. It’s also possible to refinance your car loan, which can be fast and easy.
Subprime Credit Card
Back in September, Experian said subprime credit card limits were at their highest in five years, totaling $6.4 billion during the first six months of 2016. This contrasts with a decline in delinquency rate among the subprime and deep subprime borrowers by 6% during the same period.
There are so many ways to use a credit card for and you can reap miles, bonuses, and rewards. Did you know that credit cards can rebuild credit fast? By being a responsible user, that is paying off your balances on time and in full, every month. In shopping for subprime credit cards, don’t fall for ones with excessive fees.
For Other Purposes
Subprime Personal Loans
If you’ve been shut out of traditional financing, consider these alternative loans for various purposes:
- Peer-to-peer loans. Also called marketplace loans, they are alternative financing between individuals. Being peer-to-peer, the requirements are not as stringent as with bank loans and you could borrow a higher amount. But your rate would depend on your meeting each marketplace lending site’s qualifications.
- Credit union loans. Considered as the better alternative to bank loans, they offer relaxed qualifications and lower rates. These personal loans tend to have shorter loan terms and have limits depending on your credit score and loan type.
Other options for subprime borrowers or anyone for that matter to get a loan are (i) having it co-signed with someone who has a good credit standing and/or (ii) securing the loan with a personal asset (collateral).