Should I get a subprime loan?

The term subprime loan is somewhat confusing. Since the sub means below, it would be reasonable to assume that a loan on a subprime is desirable as a main interest rate offered at a given time. In fact, the opposite is true. The Subprime loan is offered for above the main interest rate, usually because a person's credit rating is less than perfect and is a greater risk that the creditor will not be repaid. This means that the person pays more interest on borrowed money instead of less. Not all creditors can qualify for the best rates and these rates will vary considerably based on market and type of loan. The Subprime loan may also differ considerably. In fact, most financial advisors propose shopping if you can only qualify for a Subprime loan, because each creditor can have different credit value criteria for determining.

Some finaNative experts also recommend not accepting a loan if you can only get one for the Subprime rate, because you will eventually pay more interest than for loans you can get for the main rate. In some cases, however, it still makes sense to get a loan if money is really necessary, and there is no other way of repaying the debts. With the fall of houses in some areas since 2006, some people who would be considered a loan on Subprime may not be able to get one.

Many creditors focused on lending money for subprime rates to debtors with less than perfect credit. Ideal for many of these debtors, buying houses in 2004-2005, it was that the property flourished and that in a few years when introducing credit value, debtors could refinance their homes at lower rates. Some only took the loans to the Subprime rate, which meant that they did not receive any capital in their homes.

Instead of continuing to continue the housing, there has been aA significant decline in domestic values ​​in 2006 and 2007. Many people were unable to refinance their homes at a lower rate and people with interest loans were glued with larger payments than they could afford, and houses that actually cost less than at the time of purchase. The subprime rate did not help the matter and many people were forced to sell their homes or fail on their loans. This situation caused concerns about creditors whose primary customers are those who have a subprime loan. The high number of starting values ​​of loans due to the inability to make high payments led to creditors with less money for loan and less profits.

In 2007, some creditors introduced more strict criteria for obtaining a loan on a Subprime and also raised interest rates for which they can borrow money. This is reflected in less domestic sales, continuing decline in retail values ​​of houses and a stagnant housing market. On the other hand, the more difficult to obtain a loan can save money to some people and create forIncentives to increase their credit score.