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- What Is a B/C Loan?
A B/C loan is a loan to low credit quality borrowers and borrowers with minimal credit history. This type of financing, which includes personal consumer loans and mortgages, is typically issued by alternative lenders charging high-interest rates and fees. They offer a second tier of loan eligibility to subprime or thin file borrowers, the sort of applicant who would not qualify for an A-labeled loan, which follows more conventional standards and is issued by traditional financial institutions.
- KEY TAKEAWAYS
- A B/C language is a loan provided to either a low credit quality borrower or a borrower with little to no credit history.
- Alternative lenders, as opposed to standard market lenders, provide loans to borrowers with low creditworthiness.
- The rates and fees on B/C loans are typically high, particularly when compared to standard loans, to account for the riskiness of lending to a borrower with low creditworthiness.
- B/C loans are less favorable than A-labeled loans but better than D-labeled loans.
- The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has put in regulations to make predatory lending more difficult.
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