What is a Subprime Loan?

Many times the question is asked "what is a subprime loan?" The short answer to this question is that it is a loan that you must apply for when you cannot get one through normal channels, or in other words, it's for those with less than stellar credit. This can be caused when a person is late on payments, or have too much credit and possibly overextended ourselves.

Higher Rates


When we talk about subprime loans they are synonymous with higher interest rates. The reason for this is that the lender views you as a higher credit risk than someone with no blemishes. It doesn't matter that the issue with your credit may have happened because of circumstances beyond your control.

Getting Back on Track


The higher interest rates are the price we pay when we have gotten behind in our bills or otherwise had trouble making our payments on time. The good news is that as you make your payments on time, and do not cause any reason for a lender to add a new blemish, your credit score will rise and eventually move you away from subprime into the regular rates that others enjoy.

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