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Cost of Funds

   Also found in: Acronyms 0.12 sec.
Cost of funds
Interest rate associated with borrowing money.

Cost of Funds
The amount of money paid in interest on a loan. The cost of funds is an expense for both personal and business loans. It also refers to the interest rate in addition to the absolute amount in interest.


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Credit agreements that have a low threshold sometimes provide for the affected lenders to receive compensation for their increased cost of funds from the borrower in lieu of suspending the LIBOR pricing option for all lenders.
 
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