What are subprime personal loans and how to apply for them? MintGenie explains

livemint.com:

personal loans cater to borrowers with lower credit scores, typically below 620, who may face challenges in qualifying for conventional bank loans. These loans carry elevated interest rates, intended to offset the heightened risk of borrower default for the lenders.These lenders prioritise a borrower’s repayment capacity, a departure from traditional lenders who heavily rely on credit scores as a measure of creditworthiness.

Subprime loans are based on factors such asThis does not, however, mean that credit scores are disregarded entirely. A credit score is one of the factors, but not the most significant one.

Even in the case of favorable other variables, subprime lenders may become uneasy if the score is extremely low. Subprime lenders essentially examine more than just your credit score to determine your overall financial situation and loan-repayment capacity.The benefit is that subprime loans allow persons who do not qualify for standard loans to borrow money for unforeseen costs, debt consolidation, or other purposes.

However, if you’re already struggling financially, the large monthly payments of a subprime loan may make it difficult to meet other obligations, perhaps leading to a debt spiral.Given the high interest burden associated with these loans, borrowers might consider alternative solutions such asSubprime loans may be helpful, but before committing, compare rates and terms from other lenders. The high interest rates and dangers associated with subprime personal loans should be disclosed to borrowers.Frequently Asked Questions (FAQs)Depending on how well you repay subprime loans, they may have a positive or negative effect on your credit score.