Subprime Lending: Loans Made to Certain Types of Borrowers

Q.  'Subprime lending' is a term applied to the loans made to _________.
- Published on 20 Jul 15

a. Those borrowers who do not have a good credit history
b. Those borrowers who have a good credit history
c. Those borrowers who do not have a good debit history
d. Those borrowers who have a good debit history

ANSWER: Those borrowers who do not have a good credit history
 
These loans are characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.

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