What is subprime lending? Cons and Pros of subprime lending

What is subprime lending?

Recently, especially in America, subprime lending, which has come up again, used to be a procedure. But it has been reactivated for the past few years and has been applied to people with bad credit scores. Let’s explain the question of what is subprime lending in detail. It is the name given to the market where the feedback and the credit rating is bad and therefore the credit risk is given to the mortgages given to the high individuals and groups and these mortgages are bought and sold.

When to use subprime lending?

Subprime lending; It is a credit package designed for people who need credit but cannot get credit for some reasons. It is the privilege offered to people who do not have high income and who do not have a credit score. So, when to use subprime lending? This question is very important. Because we do not recommend using this credit unless it is necessary. More than the pros, there are cons. We’ll elaborate on the headline below. Please note that the interest rates of this loan type are very high. Obviously, it is a kind of credit that banks use to exploit people who are already poor and needy.

Cons & Pros of subprime lending

If you really need this loan and you have to use it, you need to know the pros and cons. It is important to know what you will encounter. Cons & pros of subprime lending is listed as follows:

Pros of subprime lending: If you have a bad credit score and cannot get loans from banks, you can use subprime lending for your urgent needs. Because in this type of credit, credit score is not taken into consideration. It’s enough to have a little income. You will receive a long-term but very high interest rate loan.

Cons of subprime lending: Interest rates become very astronomical. The standard may be almost 2-3 times higher than interest rates. You may also need to show a mortgage. If your monthly income is not sufficient, a real estate mortgage may be requested.

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