Tag: Lending

Subprime Lender definition explanation

What is Subprime Lender?
A type of lender that specializes in lending to borrowers with a tainted or limited credit history. Subprime lending is more concentrated in a smaller number of large lenders than prime lending. The subprime loan market is more tiered compared to the prime loan market, where terms and rates vary little between borrowers. Read more for examples and further explanation including related video clips and also comments
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Collection Agency definition explanation

What is Collection Agency?
A company hired by lenders to recover funds that are past due or accounts that are in default. The lending company itself may also have a division or subsidiary that acts as its collection agency. A collection agency is often hired after a company has made multiple attempts to collect its receivables. Read more for examples and further explanation including related video clips and also comments
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Either-Way Market definition explanation

What is Either-Way Market?
A condition that exists in the eurodollar interbank deposit market when the bid and offer rates for a particular period are equal. Increasing levels of liquidity can narrow the spread between bid and offer rates until the two values are identical, resulting in an either-way market. Read more for examples and further explanation including related video clips and also comments
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Floating Interest Rate definition explanation

What is Floating Interest Rate?
An interest rate that is allowed to move up and down with the rest of the market or along with an index. This contrasts with a fixed interest rate, in which the interest rate of a debt obligation stays constant for the duration of the agreement.

A floating interest rate can also be referred to as a variable interest rate because it can vary over the duration of the debt obligation. Read more for examples and further explanation including related video clips and also comments
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Subprime Auto Loan definition explanation

What is Subprime Auto Loan?
A type of auto loan approved for people with substandard credit scores or limited credit histories. There is no official cutoff score for prime versus subprime, but it should be noted that these loans carry higher interest rates than equivalent prime loans, and may also come with prepayment penalties if the borrower chooses to pay off the loan early. Read more for examples and further explanation including related video clips and also comments
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NINJA Loan definition explanation

What is NINJA Loan?
A slang term for a loan extended to a borrower with “”no income, no job and no assets””. Whereas most lenders require the borrower to show a stable stream of income or sufficient collateral, a NINJA loan ignores the verification process. Read more for examples and further explanation including related video clips and also comments
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Fallout Risk definition explanation

What is Fallout Risk?
The lending risk that occurs when the terms of a loan are confirmed simultaneously with the terms of a property sale. Because the mortgage terms are set but the sale is not finalized, there is a risk that the transaction may not be completed. This represents a risk to the mortgage pipeline, as the loan may not be issued. Read more for examples and further explanation including related video clips and also comments
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Capital Requirement definition explanation

What is Capital Requirement?
The standardized requirements in place for banks and other depository institutions, which determines how much liquidity is required to be held for a certain level of assets through regulatory agencies such as the Bank for International Settlements, Federal Deposit Insurance Corporation or Federal Reserve Board. These requirements are put into place to ensure that these institutions are not participating or holding investments that increase the risk of default and that they have enough capital to sustain operating losses while still honoring withdrawals.

Also known as “”regulatory capital””. Read more for examples and further explanation including related video clips and also comments
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