what are the drawbacks of subprime loans 
for borrowers the higher interest rates will mean a costlier loan over time which may be harder to service for a borrower who already has financial troubles on a systemic level defaults on subprime loans have been identified as a key factor in the 2008 09 financial crisis 1lenders are often seen as the biggest culprits freely granting loans to people who couldn t afford them because of free flowing capital following the dot com bubble of the early 2000s still borrowers that bought homes they truly could not afford contributed as well did subprime lending cause the 2008 09 financial crisis most experts agree that subprime mortgages were an important part of the financial crisis when it comes to the subprime mortgage part of the crisis there was no single entity or individual at whom one could point the finger instead this crisis involved the interplay between the world s central banks homeowners lenders credit rating agencies underwriters and investors the bottom linesubprime mortgages are mortgages offered to borrowers with low credit ratings subprime mortgages are viewed as a greater risk to the lender and therefore come with higher interest rates depending on the personal situation of the borrower it may be beneficial to wait till their credit score improves before taking out a mortgage so that they may obtain better interest rates 