The basic strength of the below-prime market pricing model is that it allows the bank to lend at low money market interest rates plus a small margin to cover risk exposure and provide a profit margin.

Question

Quizplus · Accepted Answer

The statement is true. The below-prime market pricing model allows banks to offer lower interest rates to borrowers with less-than-perfect credit scores, but still earn a profit by adding a small margin to cover their risk exposure and generate a profit margin. This pricing model can help banks attract customers who may not be able to qualify for financing from traditional lenders and increase their lending portfolio.

The Basic Strength of the Below-Prime Market Pricing Model Is