The practice of extending loans to people with deficient credit history and are ineligible for best market interest rates is known as sub prime loans. Due to the combination of high interest rates, bad credit history and adverse financial institutions, sub prime loan are highly risky for lenders as well as borrowers. Sub prime lending includes sub prime mortgages, sub prime car loans, and sub prime credit cards. The credit status of the borrower is termed as “sub prime”
Sub prime lenders take the risk of lending the people with poor credit rating and compensate for this risk by a higher interest rate. If the borrower has a sub prime credit card, he may be charged higher late fees, higher over limit fees, yearly fees or upfront fees and will not be given a “grace period’ to pay late fees unlike prime credit card holders.
Sub prime borrowers may utilize the opportunity to purchase home, car or even paying down on a high interest credit card. If borrowers maintain a good record they would be able to get refinance back into the mainstream rate after a period of time called “credit repair0
Sub prime loans can be obtained either as sub prime […]

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