The different between Base rate and Prime rate in banks lending?

Answer 1

depends on the loan ...

Prime rate, in essence, refers to the bank's 'best' rate for ordinary, short term business loans in the domestic US market. You can think of that as a base rate, but ONLY for short term loans to established businesses.

In fact, Prime is not the best [lowest] rate being offered to any business customer ... some customers are such obviously strong credits that they can and do get a lower than Prime rate.

Base might refer to a different market or different type of loan than domestic, short term business loans. For example, foreign trade can be financed in international markets [outside the US and US banking regulations] where the Base rate might be Libor [London InterBank Offering Rate].

A different base rate might apply to adjustible rate mortgages [ARMs] -- the monthly average of 10 year yield to maturity US Treasury Bonds as reported in the WSJ, for example, or the average rate paid on deposits for all covered savings and loans on the US West Coast.


does this help?

Answer 2

If you are talking base rate for a country, then it is the % of the Bank of England (for example) is charging other banks for example )The Abby) to borrow that. Within high street banks, a base rate is the lowest possible rate they can give you on your lending dependent of your credit rating. This will be the Bank of England base rate, plus their profit margin %.

A prime rate is the other end of the scale, where if you have a bad credit rating or CCJs then your liability is higher, therefore the banks need to insure that money and cover those cost as well as make a profit, so the % they add to the Bank of England base rate is higher.

Hope that helps.

Answer 3

Actually it's very interesting that you were not asked about your ethnicity. When providing a loan, the lender is required to identify the race of the applicant and submit it with the application in order to be certain that the bank is complying with fair lending laws. In fact, if they ask and you refuse to answer, they have to guess your ethnicity by appearance and submit it. If they're not asking, however, it does make me wonder if perhaps they're altering the correct ethnicity...

Answer 4

For Finance and credit solutions I always visit this website where you can find all the solutions. http://creditandfinancesolution.info/index.html?src=5YArwfkwWA451

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