Subprime lending refers to the practice of offering loans to borrowers with lower credit scores or limited credit histories. These individuals are considered higher risk because they may have a history of missed payments or defaults. As a result, lenders often charge higher interest rates to compensate for the increased risk of non-repayment. This type of lending is commonly associated with mortgages, auto loans, and personal loans. While subprime loans can provide access to credit for those who might otherwise be denied, they can also lead to financial difficulties if borrowers struggle to meet the higher payment obligations.