The phrase
"less risk to the lender" means that there is a smaller chance of the lender losing money or not getting repaid when they give a loan or financial support to someone.
Full definition
Small - dollar personal loans, on the other hand, are usually unsecured loans for $ 3,000 or less and
present less risk to lenders because the borrowed amount is smaller.
With this in mind, better credit scores
mean less risk to lenders and often better rates on loans and credit cards for the consumer.
Secured loans usually come with lower interest rates compared to an unsecured loan because there is
less risk to the lender who has collateral to fall back on.
With secured loans, using your valuable motor vehicle as collateral
gives less risk to the lender, hence why it is easier to obtain this type of loan.
Government Guaranteed: In reference to USDA (Rural development mortgage guaranteed by the Federal government) loans which the USDA will repay in the event of a default and VA (Veterans Affairs guaranteed) loans which the VA will repay in the event of default, offer 100 % financing options but with
less risk to the lender because of the government guarantees.
Secured loans have one major advantage over unsecured loans in that they
represent less risk to the lender, since they can always size the property if you default on the loan.
There's
far less risk to lenders if they lend money for a car (and put their name on the title, and in the case of a car actually hold the title),...
Essentially, auto loans are secured loans, with the vehicle itself acting as a sort of collateral against default (i.e., if you don't pay back your loan, the lender can sell the car to get their money back), which
means less risk to the lender.
Thus the lower a property's loan to value
the less risk to the lender which correlates to a lower mortgage rate.
Secured loans generally have lower interest rates than unsecured loans since there is
less risk to the lender.
A HELOC poses
less risk to the lender than an HEL because the total value of the equity is not cashed out all at once.
True, the better the deal,
the less risk to the lender, but the points are going to be substantial.
The premise that a 3 % down FHA owner occupant loan is
less risk to the lender than a 25 % down investor loan is incorrect.