Definition

Loan Pricing

Loan pricing means determining the interest rate for granting loan to creditors, be it individuals or business firms. It is one of the most important, however difficult task in lending funds to business firms & other customers. Because it is always very difficult to exactly know what the actual loan risk a particular loan application is. Generally the lender wants to charge a high enough rate to make sure that the loan will be profitable as well as it will covers enough compensation against the default risk. On the other hand loan price must be set low enough that helps the customers to find it easy for successful repayment of loan.

Share it:  Cite

More from this Section

  • Licensing Contracts
    A MNE must be careful to preserve its rights to receive funds from subsidiaries as royalties, ...
  • Self-liquidating loans
    Self-liquidating loans is the business loans, usually to support the purchase of inventories, ...
  • Noncancellable
    Noncancellable is a continuance provision in a health insurance policy stipulating that ...
  • Opportunity Cost
    Opportunity Cost is the rate of return that can be earned on the best alternative investment. ...
  • Credit
    Credit means bank’s advance or investment that is made by commercial banks or other ...