subprime loan

Definition

A loan offered to an individual who does not qualify for a loan at the prime rate due to their credit history. If a lender thinks that there is an above-average risk involved in giving a loan to a certain individual, they will sometimes offer them a subprime loan, which has an interest rate higher than the prime rate. The subprime rate offered by the lender can vary from institution to institution.

Use subprime loan in a sentence

The practice of issuing a subprime loan came under heavy scrutiny after the housing market crunch in the last decade.

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My brothers credit ratings were so bad that even if I were to cosign , the best he could get would be a subprime loan.

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After losing his job and going through bankruptcy, Fred was unhappy to learn that he didn't even qualify for a subprime loan.

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