subprime loan

A subprime loan is offered to borrowers who do not qualify for prime rates due to factors like poor credit, low income, or limited credit history. These loans carry higher interest rates to offset the increased risk of default. As of June 2025, the average U.S. prime rate is approximately 7.5%, while subprime loan rates can range from 10% to over 20%, depending on the borrower's risk profile.