A loan made to a borrower who is ineligable for the best market rates (prime rates), but rather at a higher rate of interest because of increased risk factors (the bank fears they are less likely to repay the loan due to lack of collateral or low income).
Definition from Nolo’s Plain-English Law Dictionary
A loan to a borrower who does not qualify for a loan at the best market rates (the prime rate) because of a weak credit history, inadequate assets to secure the loan, or an income too low to guarantee payments. These loans are offered at a higher interest rate because of the increased risk to the lender. Not all lenders engage in subprime lending and the rates and terms of the loans vary from institution to institution.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:25 pm