CMD superman logo.jpg SourceWatch, a project of the Center for Media and Democracy,

depends on donations from people like you!

Click here to make a tax-deductable contribution.

Subprime lending

From SourceWatch
(Redirected from Subprime loan)
Jump to: navigation, search

A subprime loan is a "type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans. Quite often, subprime borrowers are often turned away from traditional lenders because of their low credit ratings or other factors that suggest that they have a reasonable chance of defaulting on the debt repayment.

"Subprime loans tend to have a higher interest rate than the prime rate offered on traditional loans. The additional percentage points of interest often translate to tens of thousands of dollars worth of additional interest payments over the life of a longer term loan.

"However, getting a subprime loan could still be a good idea if the loan is meant to pay off a higher interest debt (such as credit card debt) and the borrower has no other means for payment.

"The specific amount of interest charged on a subprime loan is not set in stone. Different lenders may not value a borrower's risk in the same manner. This means that a subprime loan borrower has an opportunity to save some additional money by shopping around."[1]


Resources

Related SourceWatch articles

References

  1. Subprime loan, Investopedia/A Forbes Media Company, accessed October 24, 2007.
  2. See list of member companies, Financial Services Roundtable.

External articles

2004

2005

2006

2007

External resources