A subprime loan is a type of loan offered to individuals with poor credit scores, making them high-risk borrowers. These borrowers often have little to no down payment and may have a history of delinquent payments, bankruptcy, or foreclosures. Subprime loans usually have higher interest rates to compensate for the risk associated with lending money to such borrowers.

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A Subprime Loan Is

Question 14

Multiple Choice

A subprime loan is

A) a mortgage to some one with bad credit and little or no down payment.
B) the lowest rated fixed rate mortgage.
C) is made to a borrower with good credit where the lender does not verify the income stated by the borrower.
D) a derivative.

Correct Answer: