Subprime borrowers are those with weakened credit histories or reduced repayment capacity. Loans to these borrowers historically have had a higher delinquency rate. Many lenders have expanded their lending programs and added subprime products as a method of meeting their _______________ by providing greater credit access to lower-income consumers.
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A. B. C. D.A
The answer to this question is D. Predatory Lending.
Subprime borrowers are those individuals who have a weakened credit history or reduced repayment capacity. They may have a history of missed payments, defaults, or bankruptcy filings. Due to their high-risk profile, loans to these borrowers have historically had a higher delinquency rate. However, many lenders have expanded their lending programs and added subprime products as a method of meeting their business goals by providing greater credit access to lower-income consumers.
Unfortunately, some lenders engage in predatory lending practices when offering loans to subprime borrowers. Predatory lending refers to lending practices that take advantage of borrowers who may not fully understand the terms of the loan or who may not have the ability to repay the loan. Predatory lenders often charge excessive fees and interest rates, use aggressive collection tactics, and make loans with terms that are designed to trap borrowers in a cycle of debt.
Predatory lending is a serious problem in the financial industry, and it can lead to devastating consequences for borrowers. It is important for lenders to follow ethical lending practices and ensure that they are not taking advantage of vulnerable borrowers. Additionally, borrowers should take the time to educate themselves on the terms of any loan they are considering and carefully consider whether they have the ability to repay the loan.