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Useful articles for your finance management by our team of experts

definition of subprime

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Q: What is the meaning of Subprime?

Answer: Subprime lending is a financial term that was popularized by the media during the credit crunch of 2007 and involves financial institutions lending in ways which do not meet "prime" standards to an extent which puts the loans into the riskiest category of consumer loans. The loans were made to persons who did not normally qualify for loans due to their credit history, income, and ratio of debt to assets. Therefore many of the loans were not good and not repayable under the circumstances. Subprime borrowers show data on their credit reports associated with higher default rates, including limited debt experience, excessive debt, a history of missed payments, failures to pay debts, and recorded bankruptcies.

Answer inspired by Wikipedia

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