What is Near Prime Lending?
Lending criteria’s are getting tougher and borrowing capacity has been reduced, making it even more tricker for customers whose circumstances don’t fit a ‘vanilla’ prime-customer profile to borrow.
So, how do these types of customers who fall outside the “prime-borrower” target market of banks gain access to the finance they need? The answer is near prime lending!
Near Prime home loans are for borrowers who don’t quite meet the requirements of a banks lending criteria. It provides solutions to customers who fall just outside the scope of traditional lending policy. These customers may be self-employed, they may have experienced temporary financial hardship due to an event such as a health condition or relationship breakdown, or their employment and income may fall outside the standing lending guidelines.
A near prime loan is an alternative option that more often has many of the same benefits as a ‘regular’ loan.
Near prime lending borrowers are considered to be slightly less creditworthy than prime borrowers, but still more creditworthy than subprime borrowers. Near prime borrowers typically have credit scores in the range of 620 to 699, which is just below the prime range of 700 and above.
Near prime lending or credit products, typically have higher interest rates than prime loans, but lower interest rates than subprime loans. Lenders will also consider other factors when evaluating near prime borrowers, such as their income, employment history, and debt-to-income ratio. The goal is to assess the borrower’s overall creditworthiness and ability to repay the loan.
If you’ve been thinking about borrowing funds or want to discuss your financial circumstances, speak with the team at Trusted Financial Choice today!