A secondary market is a place where investors can list their loans for sale to other investors. Hence, the name secondary. In the secondary market, loans can be listed for sale with a discount or a premium vs the loan's principal value.
Listing a loan with a discount means that someone is selling the loan principal for a cheaper amount than they initially bought it; therefore, making the offer more attractive for potential buyers. Sales with a discount usually happen if an investor is seeking to sell a loan quickly.
On the other hand, we can sometimes observe offers also with a premium, meaning that in order to buy the loan we would need to pay more than the original investment was done for. This phenomenon usually happens if loans were bought during a high-interest rate environment and the present market offering no longer offers similar attractiveness. Thus, if someone wants to get access to such a loan (with a higher interest rate than currently offered), they would be willing to pay a premium for greater potential returns.
A note of caution.
Before you proceed with secondary market investments, get more acquainted with loan investments in general as some offers in the secondary market can be irrational and unfavorable. In addition, secondary market trading is frequently subject to additional fees, so you might be incurring unnecessary losses to your investments.
In general, we usually leave the secondary market for most active investors or those seeking to exit their investments early in extraordinary situations.