Nolo's Plain-English Law Dictionary

Subprime Loan

A loan to a borrower who does not qualify for a loan at the best market rates (the prime rate) because of a weak credit history, inadequate assets to secure the loan, or an income too low to guarantee payments. These loans are offered at a higher interest rate because of the increased risk to the lender. Not all lenders engage in subprime lending and the rates and terms of the loans vary from institution to institution.