Business, 26.07.2019 11:30 NeverEndingCycle

Prime lending rates are 1) than subprime lending rates and are commonly offered to people with credit scores. budget challenge

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Prime lending rates are lower than subprime lending rates and are commonly offered to people with good credit scores.

A prime lending rate is a rate used by a bank that is typically used in favor of "good" customers. These people tend to have great credit so they get a larger amount approved but at a lower interest rate than subprime. Subprime interests rates are higher because they are typically given out to those with poor credit history.

Answer from: mishcacross21

Prime lending rates are “lower” than subprime lending rates and are commonly offered to people with a “good” credit score.

Further Explanation:

Prime lending rate:

The prime lending rate is the interest charged by the banks to provide prime lending. Prime lending is given to those customers who have good credit scores. This type of lending is given to trustworthy customers. In this lending, there is a necessity of mortgage in case of lending without the mortgage; the loan will not be issued to the customers. The risk associated in this lending is less. That's why the rate of interest is charged lower.

Subprime lending rate:

The subprime lending rate is the interest charged by the banks. It is always higher than the prime lending rates. There is no need for a mortgage in the case of subprime lending. That's why the interest charged on this is higher than the prime lending. Subprime lending is given to those customers which having poor credit scores.

As in prime lending rates are lower than the subprime lending rates because the risk involved in the prime lending is less than the subprime lending. When the customer fails to pay the amount of loan in prime lending, the lender has mortgage value to get back their loan amount. This lending is offered to those people who have a high credit score. A credit score means a score that shows how much probability the customers will pay back the loan amount.

Learn more:

1.Learn more about credit score

2.Learn more about mortgage

3.Learn more about credit utilization value

Answer details:

Grade: Middle School

Subject: Accounting

Chapter: Types of loans

Keywords:subprime lending rates, prime lending rates, lower, good credit score, mortgage, rate of interest, trustworthy customers, the interest charged, the risk associated.

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