Subprime

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Definition: Subprime


Subprime


Full Definition of Subprime


Subprime refers to the range of credit scores below those preferred by lenders. Colloquially, it refers to risky or less-than-ideal loans.

Subprime originally referred to the range of credit scores that fell below a certain, desirable level. Loan applicants with these lower credit scores were assumed to be at higher risk of default because of previous defaults, bankruptcy, non-existent debt history, or extensive outstanding debt, and thus would be expected to pay a higher APR. It has never been very carefully defined, and has often been used whenever the writer or speaker wants to evoke a less-than-ideal lending situation.

Mortgage loans made to subprime borrowers were one component of the housing bust that began in 2007 and the subsequent financial crisis. Another common use of the term among investors is in reference to uncollectable debts on the balance sheets of irresponsible investment banks and other financial institutions.


Related Phrases


Credit crunch
Credit rating
Default
Subprime mortgage debacle
Mortgage
Loan


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March 28, 2024 https://payrollheaven.com/define/subprime/.
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Subprime. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/subprime/ (accessed: March 28, 2024).
American Psychological Association (APA):
Subprime. PayrollHeaven.com. Retrieved March 28, 2024
, from PayrollHeaven.com website: https://payrollheaven.com/define/subprime/

Definition Sources


Definitions for Subprime are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th November, 2021 | 0 Views.