A sub-prime loan is a loan type which focuses on the individual credit of the borrower. The sub-prime refers to the status of their credit history and indicates that a loan to an individual considered sub-prime is more of a risk. This is usually used as a classification for individuals who have failed to make payments on loans in the past, or filed for bankruptcy within the recent past. It can also point to personal history such as a divorce, medical emergencies, or even unemployment.
In a lenders eyes all of these factors may contribute to a loan which they view as either too risky or needing special attention. When lender are examining these types of loans they will also look at several other factors including; the amount of money being lent, the way the loan is structured, the way the repayment plan is structured, as well as the classification of the loan. Many times because a individual will be classified as a sub-prime borrower they will open themselves up to financial fraud by looking for someone who can help them obtain what they want to get. Unfortunately, many of the lender who are willing to assist you when you are in this situation are in it for themselves and will twist the loan in their favor making you pay much more then you originally agreed upon. This is extremely important to remember in any financial situation.
Always be sure to examine who ever you are entering into a lasting financial contract with. Often times you can simply log on to the internet and include the name of the lender who you are considering along with key words such as fraud in order to find out if they have been involved in shady dealings in the past. Be sure that you protect yourself regardless of how much you may need the money.