Subprime loan approval is not easy to get. If you have poor credit, it can feel like no lender will approve you for a loan. However, if you’re persistent and willing to work with a reputable subprime lender, you’re likely to find one that will give you a chance for a fresh start.
Check Your Credit Score
The first step to getting approved for subprime financing is to check your credit score. A high credit score can mean you’re more likely to get approved for loans and other forms of financing. The lower your credit score is, the more likely you’ll be denied a loan or other financing offered by credit lenders.
Your next step should be checking your credit report. Your credit report will show all the loans and debts you’ve taken out in the past six years and any late payments or bankruptcies on record, among other details about whether or not you pay bills on time. And how long it takes to pay off debts and if there are any inaccuracies in the information listed on this report.
Have a Cosigner Ready
Next, you’ll need to have a good cosigner. This person should have a good credit score and be someone who is reliable and trustworthy. They should also be able to afford the payments if you can’t. Having a cosigner that has a good relationship with you will help strengthen your chances of getting approved for the loan because lenders like seeing people in their network willing to support each other financially.
Make Sure You Meet Income Requirements
If you’re self-employed, be prepared to provide additional documentation. While income is usually the most crucial factor in determining whether or not a lender will approve your loan, their requirements may vary depending on the type of employment you have and how long you’ve been working for your current employer.
Lantern by SoFi experts explains, “Applying for and getting a subprime loan doesn’t hurt your credit score any more than the average loan. As far as your credit score is concerned, there is nothing different about a subprime loan versus a prime-rate loan. ”
If you have two jobs, be prepared to prove it! Some lenders ask for proof that both of these jobs are real. They may even want to see tax returns from both employers so they can verify how much money is coming in each month.
Have A Down Payment Prepared
It’s a good idea to have a down payment prepared. No lender wants to make a loan without some level of protection, so they’ll ask you for it.
Generally, lenders want at least 20% of the purchase price in cash before they begin processing your loan application (the exact amount varies). This means that if you’re buying a $100,000 home and need to finance 100% of the purchase price with a mortgage loan, you’ll need at least $20,000 saved up to qualify for approval.
Have a Budget in Place
The first step to getting approved for a subprime loan is knowing how much you can afford to pay each month. It would be best if you were honest about how much money you make, how much debt you have and what your expenses are. Once you have information, calculate a budget for the next few months to know exactly where your money is going each month.
If you’re looking to get a subprime loan, it’s important to understand what that means and how it affects your ability to get approved.
