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Lenders have something (usually money) that the borrowers want; and the Borrowers have something that the Lenders want (their money back).

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12y ago

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How do lenders make money from borrowers?

Lenders make money from borrowers by charging interest on the money they lend. Interest is a fee that borrowers pay for the privilege of borrowing money, and it is typically a percentage of the total amount borrowed. This allows lenders to earn a profit on the money they lend out.


Who are lenders and borrowers?

Lenders are the banks and finance companies who contract loans for the purchase of vehicles, homes, and other property. Borrowers are those who contract for the loans so they may purchase vehicles, homes, and other property. Although you did not ask, dealerships and realtors are those who act as the agents of the lenders to put borrowers in debt.


What advantages and disadvantages do commercial banks gain from maintaining lenders and borrowers?

Lenders (depositors) are an essential source of any bank's main tool i.e the fund. The borrowers provide the profit (interest) which makes the whole system revolve.


How do home interest rates compare between different lenders?

Home interest rates can vary between different lenders based on factors such as the lender's policies, the borrower's credit score, and the current market conditions. It's important for borrowers to shop around and compare rates from multiple lenders to find the best deal.


What do you called a charge borrowers pay to lenders?

Interest, late fee, returned check charge...


Do lenders have stringent guidelines when it comes to borrowers with bad credit?

People with bad credit have a hard time getting a loan. Lenders want to ensure they will be paid back.


How do mortgage lenders determine affordability for potential borrowers?

Mortgage lenders determine affordability for potential borrowers by looking at factors such as income, credit score, debt-to-income ratio, and down payment amount. They assess these factors to determine if the borrower can comfortably make monthly mortgage payments.


What is the basis of the relationship between the fisher effect and the loanable funds theory?

The borrowers desire to achieve a positive real interest.


Specified amounts of money borrowers must pay lenders for the use of money or borrowed funds is are known as?

interest


When financial institutions lend money they charge borrowers?

The banks or lenders charge interest. The amount depends on your credit.


Getting a Low Interest Rate for an Auto Loan?

Interest rates for auto loans will vary from lender to lender so savvy borrowers should check with multiple lenders before choosing who to borrow from. Lenders base the interests rates they offer their borrowers on factors such as the borrowers' credit report score, income and collateral. Borrowers who are clearly in a position to afford the vehicles they are purchasing and who have credit history that puts them in good standing will be able to secure low interest rates for their auto loans, especially when they carefully consider the rates offered by different lenders before selecting their loan provider.


Why is mortgage insurance required?

Mortgage insurance is required to protect lenders in case a borrower defaults on their loan. It reduces the risk for lenders, allowing them to offer loans to borrowers with lower down payments.