cost of funds


cost of funds
United Kingdom
The cost of borrowing money. In the context of lending, it means:
• The cost to the lender (typically a bank) of borrowing in an interbank market to enable it to fund the loan it has agreed to provide to the borrower. For example, the cost of borrowing in the London Interbank Market is typically the London Interbank Offered Rate together with any mandatory costs.
• The cost to the borrower of borrowing the loan from the lender.
In each case the cost comprises the aggregate of interest and fees on the principal amount borrowed. The cost of funds of an entity may be determined by a number of factors, including its credit rating.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

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