Credit Corner: Why am I a subprime borrower?

Borrowing is inevitable.  Whether it be for a car or home, sometimes we need more funds than we have on hand to make a large purchase.

It is our financial responsibility to make sure that loan is repaid.

But life happens.

My daughter and I play pretend with her kitchenette and plastic urinals. Haven’t considered the loan I took out in my single days. I’m with baby girl right now. All that seems to matter is the family at the moment.

Guys, if you really love your family,  you would consider that loan too.

When you guys want that new house for the new attention, you’ll be denied because of they same loan you never thought about since college.

Or worse. The rental or mortgage company charges you a ridiculous amount to move in. More money outta your pocket.

Those of us whose credit scores are not 720+ yet are penalized with extreme APRs and high-interest rates attached to those loans.

These subprime lenders give us another chance to show our that we can be financially responsible. My APR for mu car loan is almost at 25%.

We can get out to of this vicious by being conscious amount how we are borrowing and from whom.

I’ve been slammed with others to refinance my car loan. My loan is through Credit Acceptance,  and I know they are geared to subprime lending.

Basically,  the lender takes on a larger risk to loan money to you.  So,  it makes your payment,  interest or a combination of both higher than it could be.

I’ve really been considering switching,  but please beware of subprime loans.

Let’s break this down a little.

The Kelly Bluebook value of my car is about $6200.

I owe $6500 on my 48-month loan. That’s just what’s left. I believe the total was around 10,000.

You mean to tell me I have to pay almost $1700 (25% * $6500) in interest. None of that goes toward the principal or the amount of the loan without interest.

The bottom line is my loan is valued way higher than what my car is valued by Kelly Bluebook. But we have to have to face hard facts about our credit scores. A score of 620 or lower will land you in the same boat as me;  with a subprime loan.

But don’t be discouraged. Make sure all those payments are on time. At least making reasonable arrangement you know you can afford.

Pennies count,

The Dollar Dad

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