Subprime loans are high-interest loans given to people who have a low credit score or are at high risk of defaulting. These individuals may have a history of missed payments, bankruptcy, or foreclosure, making them a greater risk for lenders. The high interest rates on subprime loans compensate for this increased risk.

Solved

Subprime Loans Are

Question 27

Multiple Choice

Subprime loans are:

A) loans designated for use in urban markets
B) high-interest loans given to people at high risk of defaulting
C) loans reserved for home buyers who have at least a $100,000 down payment
D) low-interest loans subsidized through the Federal Housing Act

Correct Answer: