Subprime Lenders A Subprime Lender is a lender who offers loans to borrowers with bad credit. Giving loans to subprime borrowers is high risk lending, because of the higher probability of defaulting on the loan. Subprime Lenders do not advertise themselves as subprime lenders, and you can recognize them by the higher interest rates they charge on their loans. Subprime lenders charge higher interest rates compared to conventional lenders to compensate for the higher risk. Types of Subprime Lenders There are many types of sub prime lenders, depending on the loan niche they are in. The main subprime lender types are: Sub prime auto loan lenders Sub prime mortgage lenders Subprime personal loan lenders Subprime credit cards lenders The subprime auto loan lenders are in the business of lending money to borrowers with bad credit history for the purpose of buying a vehicle. The sub prime mortgage lenders serve the borrowers who cannot qualify for mortgage from a major bank like Royal Bank, TD Bank, BMO, CIBC or Scotiabank for example. The sub prime personal loan lenders offer personal loans to borrowers with damaged credit. The subprime credit cards lenders offer credit cards to borrowers with bad credit. The subprime credit cards usually come with low credit limits and high interest rates. If the borrower doesn't qualify for a subprime credit card, then they can apply for a secured credit card. If possible try to avoid subprime lenders and subprime loans. The subprime loans are more expensive to service, and you can easily run into trouble with them because of that. Think for subprime lenders as credit source of last resort (almost like payday loans), and always try to qualify for prime financing, even if your credit history is not perfect.