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What Is a Subprime Rate Loan?

April 26, 2017loan rate subprime

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What Is a Subprime Rate Loan?

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Overview A subprime rate loan is one that is offered to individuals at an interest rate above prime when the person cannot qualify for the lower rate due to low credit ratings or other circumstances that may indicate they are a credit risk. Significance Often people who do not qualify for prime rate loans are turned away by traditional lenders because of the higher chance of defaulting on repayment of the loan. Subprime rate loans give these people more of a chance at approval.