Author: Ryann Cairns
Sub prime is the term the banking industry uses to refer to those consumers whose credit is less than perfect. With credit easier to get than ever, and more and more consumers finding themselves in over their heads, the sub prime market and the sub prime programs that serve this market, are increasingly important to the banking industry. That is why you will see ads advertising loans that seem to be targeted at the sub prime market.
You may have seen these ads on TV, in the newspaper or heard them on the radio. They are the ads that offer credit to people with bad credit, slow credit or no credit. They may guarantee financing for your automobile loan or even your mortgage loan. There are some things consumers need to watch out for when seeking sub prime financing.
Unfortunately the sub prime market is served not only by legitimate operators but by those of questionable reputations as well. The first thing the consumer with bad or no credit needs to know, of course, is the interest rate on the loan that they are being offered.
Lenders are required by law to reveal the annual percentage rate of their loan products, but these disclosures are often buried in the fine print. If you cannot find the interest rate in the loan documents, be sure to ask the lender. The terms and conditions of the sub prime program are also very important. These types of bad credit loans often come saddled with high fees and excessive late payment fees.
Again, read the fine print carefully and make sure you understand all the terms and conditions before you sign the loan paperwork. Also beware of any lender that gives you blank paperwork to sign, or offers to complete the loan paperwork for you. These tactics are indications that you may be dealing with a predatory lender.
If you think you are dealing with a predatory lender, find another source for your loan. There is no doubt that having bad credit or having no credit history can make getting the loan you need a lot more difficult. However, being careful and shopping around can help you get the best rate and loan terms on your sub prime program.
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