Which of the following is typically true about subprime loans?

Subprime loans are typically associated with higher interest rates. This is because they are designed for borrowers who have lower credit scores or a limited credit history, which makes them a higher risk for lenders. To compensate for this increased risk, lenders charge higher interest rates on subprime loans compared to prime loans, which are offered to borrowers with strong credit profiles.

The higher interest rates serve as compensation for the potential default risk; lenders want to ensure they can cover losses that might occur if the borrower fails to repay the loan. This aspect is crucial in understanding how the lending environment operates, particularly regarding high-risk borrowers.

The other options reflect misunderstandings about the nature of subprime loans; for example, while some subprime loans may not heavily weigh credit history in their approval process, they still typically assess it to some extent. Additionally, not all subprime loans require collateral, as specific terms can vary by lender and specific loan type. The consistent element, however, is the expectation of higher interest rates for the risk involved.