ECONOMICS
ECONOMIC INSTITUTIONS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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loans that are given for risky home properties
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loans that are provided by commercial banks
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loans that are given to consumers with bad credit
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loans that are invested in high-risk stocks
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Detailed explanation-1: -In simple words, the credit extended to those borrowers who have low credit scores, or unsecured loans is called high-risk loans. Usually, it is the unsecured loans such as personal loans that come under this category.
Detailed explanation-2: -In short, a high-risk loan is a loan offered to those with a less than stellar credit history. High-risk loans are typically subprime loans, meaning that they are loans offered at a rate above prime to borrowers with low credit ratings. You may also see them called bad credit loans.
Detailed explanation-3: -In contrast, if an applicant has a poor credit history, they may have to work with a subprime lender-a mortgage lender that offers loans with relatively high-interest rates to high-risk borrowers-to obtain financing.
Detailed explanation-4: -An unsecured loan is supported only by the borrower’s creditworthiness, rather than by any collateral, such as property or other assets. Unsecured loans are riskier than secured loans for lenders, so they require higher credit scores for approval.
Detailed explanation-5: -Secured Loans. The simplest option to obtain loans with a low credit score is to apply for a secured loan. Unsecured Loans. If the borrower has a stable income and a low debt-to-income ratio but cannot pledge any security, they may apply for an unsecured loan. PayDay Loans. 19-Sept-2022