Describe at least three factors influencing the cost ofborrowing??

Describe at least three factors influencing the cost of borrowing??

Expert Solution

Cost of Borrowing if influence by the factors -
Credibility of Individual / Company - IN case of Individual Credit score(CIBIL) is the main factor of cost of borrowing and In case of company Credit Ratings(say AAA), if the credit score and credit rating is good they have to borrow at the low rate of interest.

Loan to Value ratio - If the Loan to value ratio is high ,the cost of borrowing is hig, because you seems to be more risky because you have less equity and more debt.

Debt to Income - If debt to income ratio is higer debt is higher as compared to regular income chances of default is higher, therefore rate of interst is higher.

Down Payment - How much amount of down payment is done is also a factor f cost of borrowing.

jeff jeffy answered 2 years ago

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