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The subprime space is really interesting vs mortgages. Like others mention, the due diligence these providers run for these is minimal. The business model has
by sbarbarian 4y ago
The subprime space is really interesting vs mortgages. Like others mention, the due diligence these providers run for these is minimal.
The business model has been so successful in recent years because there have been such large numbers of applicants. Even though they approve only a fraction, the sheer volume means their business is booming. This all translates into not having to dig any deeper than credit scores.
- rco8786 4y agoThat doesn’t make any sense. You’re implying that they’re just lending to people with the best credit scores. Which definitioally makes these not subprime loans.
- sbarbarian 4y agoSorry, didn't mean to imply that. Its the best of the worst. You just lower the threshold to hit the volumes / default rate you're comfortable with to make a profit. Subprime is anything lower than 670, so you don't need to go so low.