Subprime

(1) Considering the higher risk involved, subprime loans are generally granted at much higher interest rates than usually charged on conventional loans. Because of the borrower's poor credit rating, loan standards such as the ratio of loan to collateral value or the ratio of the borrower's debts to personal or family income or assets, or to the borrower's capacity to repay its debts, have to be set much more cautiously for subprime than for conventional loans. (2) Subprime loans often refer to mortgage loans (subprime mortgages or subprime mortgage loans), but they may also refer to loans other than mortgages, such as commercial loans, credit card receivables, car loans and other forms of instalment loans.