B/C Loan

AAA

DEFINITION of 'B/C Loan'

A classification of loans associated with the borrowers that have tainted or limited credit histories. Generally, B/C refers to any loan that is classified as subprime, or a "B" or "C" class loan.

Within the subprime sector borrowers are graded according to their credit history. Different lenders have different grading systems based on different credit requirements. One subprime lender might have a grading system with classifications designated as A to C minus, while another subprime lender might have a grading system with classifications designated as Premium to C which all fall within the subprime sector.

INVESTOPEDIA EXPLAINS 'B/C Loan'

Because of the credit risk associated with subprime lending, B/C loan usually have higher costs and interest rates than prime loans. B/C loans are important financing vehicles for consumers with less than optimal credit histories because they provide an opportunity for such consumers to repair/improve their credit to the point where they can obtain more favorable future financing terms.

RELATED TERMS
  1. Subprime

    A classification of borrowers with a tarnished or limited credit ...
  2. Subprime Lender

    A type of lender that specializes in lending to borrowers with ...
  3. Prime

    A classification of borrowers, rates or holdings in the lending ...
  4. Alt-A

    A classification of mortgages where the risk profile falls between ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  6. Acquisition

    A corporate action in which a company buys most, if not all, ...
Related Articles
  1. Credit & Loans

    4 Steps To Attaining A Mortgage

    It starts with knowing your choices as well as your price range. We show you how to get there.
  2. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  3. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  4. Trading Strategies

    Eyeing a Loan? Consider Skipping the Banks

    Peer-to-peer lending platforms, such as Lending Tree, Lending Club and Prosper, offer borrowers newfound leverage. Here's a look.
  5. Personal Finance

    What's a Commercial Bank?

    A commercial bank is a type of financial institution that accepts deposits, offers checking account services, makes business, personal and mortgage loans; and offers basic financial products ...
  6. Credit & Loans

    P2P Loans: Consider the Payoffs; Assess The Risks

    The available data seems to indicate that P2P loans, although risky, promise great payoffs, and the prospects of good returns seem to be getting brighter.
  7. Personal Finance

    Understanding Credit

    Credit has three common meanings in the financial world.
  8. Investing Basics

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  9. Investing

    Commercial Paper

    Commercial paper is a short-term debt security issued by financial companies and large corporations. The corporation promises the buyer a return, or profit, for making the loan. The return is ...
  10. Investing Basics

    Why Do Penny Stocks Fail?

    Penny stocks are speculative and highly risky investments. Lack of government and stock exchange oversight and general information leaves penny stock investors open to sudden losses.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center