Next up in our series of how lenders arrive at interest rates is looking at the true cost of funds. It could also be entitled “How much does money cost?” because, in essence, that’s exactly what it is. One thing that’s helpful in understanding this is to look at money lending as an investment for the lender. If… Read More »
Happy New Year! We briefly interrupt our “lenders and rates” series to bring you the 2025 version of Fletch Predicts. Another year is in the books. I like doing these posts as it’s fun to look back and see where I was right and wrong. My hit rate isn’t bad at all! Let’s start with sports. I hit… Read More »
Next up in our series on lenders and interest rates, let’s take a look at collateral and how collateral will affect the rate. At the risk of being a bit basic, let’s understand what collateral is – it’s something of value that a borrower puts up to “secure” a loan. And if the borrower defaults, the lender can… Read More »
Let’s continue with my series on how lenders arrive at rates. This time we’ll talk about loan types and intended use, which, honestly, is one of the easier ones to explain. In plain terms, most lenders want to know what you are going to do with the money they lend you. This is true for consumer loans (your… Read More »
Continuing on with our rate series, let’s explore the relationship between risk and rates. Risk is one of the largest factors affecting the rates you pay. In fact, nearly all lending rates begin at whatever the Federal Funds Rate is, and are then adjusted upwards based on risk and lender overhead. But risk is the big one, and… Read More »