What is a subprime loan ? - Rules for subprime loans - How do subprime loans work ?

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What Is A Subprime Loan ?


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         A subprime loan is a loan for that segment of customers who are not eligible for prime loans. Their ineligibility for prime loans is primarily because of a poor credit score, making them a riskier segment of consumers. It can also be due to the customer’s credit history suggesting likely defaulting of re- payments or a history of bankruptcy.More...

 

Rules For Subprime Loans

Rules For Subprime Loans       The subprime loan crisis has put the whole financial world in turmoil, with hundreds of financial institutions going bankrupt, and the economy crashing to new lows. The government has been forced to hand out several billion dollars as handouts to help prevent a complete collapse of the economy as we know it, and has eventually managed to stabilize the still bleak situation.More...

 

How Do Subprime Loans Work ?

How Do Subprime Loans Work          Before one can understand how a subprime loan works, it is essential to know what a prime loan is. Lending in the United States as well as in most countries mainly depends on the borrower’s credit score. A credit score is basically a representation of an individual’s history regarding payment of previous loans, payment of credit card bills, debts, monthly income, capacity to pay back loans etc.More...

 

What Are Subprime Loans ?

What Are Subprime Loans         Consider these examples. Alex, an employee, has a very bad credit history. Samar, an emigrant, is new to the country and wants to buy a car immediately. Sarah earns less salary but she wants to own a car. Roger, owner of a company that went bankrupt last year, wants to buy a new home. Alex, Samar, Sarah and Roger will need loans.More...

 

History Of Subprime Loans

History Of Subprime Loans       A loan which is made to an individual having a high credit score (basically a good borrower, who pays back his loans on time without defaulting) is called a prime loan. Lending companies usually restrict themselves to such prime loans, but since the early 1990s, loans called subprime loans have also played an important part of the lending market.More...

 

Subprime Loan Standards

Subprime Loan Standards         Subprime loans are those loans given to a specific segment of borrowers with a not-so-good credit history. Their credit history may have been blemished by defaulting of payments or due to a bankruptcy or low incomes. Hence, most subprime lenders have tightened the standards on basis of which the loans will be disbursed to potential borrowers.More...

 

 
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Home Loans :

What-Is-A-Forward-Sale-For-Subprime-Loans      Subprime loans are extended to the riskiest segment of customers. These customers would have either had a history of bankruptcy, defaulted on their loan repayments or in general, have low incomes. This customer segment is not preferred segment of borrowers as far as the traditional loan lenders are concerned. The subprime lenders, however, see them as potentially eligible borrowers and lend them loans with higher interest rates. More..



 
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( What is a subprime loan ? - Rules for subprime loans - How do subprime loans work ? )