Which of the following correctly describes what sub-prime lending is?begin{enumerate}item Lending to the people with less than ideal credit status.item Lending to the people who are high value customers of the banks.item Lending to those who are not a regular customer of a bank.end{enumerate} Select the correct answer using the codes given below:

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following correctly describes what sub-prime lending is?

A	Only 1
B	Only 2
C	Only 3
D	All of these

Explanation:

Detailed explanation-1: -Subprime lending means giving loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, medical emergencies, etc.

Detailed explanation-2: -Subprime loans have interest rates that are higher than the prime rate. Subprime borrowers generally have low credit ratings or are people who are perceived of as likely to default on a loan.

Detailed explanation-3: -A subprime mortgage carries an interest rate higher than the rates of prime mortgages. Prime mortgage interest rates are the rates at which banks and other mortgage lenders may lend money to customers with the best credit histories. Prime mortgages can be either fixed or adjustable rate loans.

Detailed explanation-4: -Subprime rates are higher than average interest rates charged on loans to riskier borrowers. These rates are offered, for instance, to borrowers with a poor or thin credit history or low credit score.

Detailed explanation-5: -Those borrows who do not have a good credit history.

There is 1 question to complete.