Which is often the source of the least expensive loan? (2024)

Which is often the source of the least expensive loan?

Parents or family members are often the source of the least expensive loans.

What is the source of the least expensive loan?

Savings and Loan Associations (S&Ls)

The loan rates on S&Ls vary depending on the amount borrowed, the payment period, and the collateral. The interest charges of S&Ls are generally lower than those of some other types of lenders because S&Ls lend depositors' money, which is a relatively inexpensive source of funds.

Which of the following is often the source of the least expensive loan?

Final answer: The least expensive loan often comes from savings and loan associations. Banks can also offer affordable loans, but they may require more paperwork and have stricter eligibility criteria compared to savings and loan associations.

What is the least expensive way to borrow money?

1. Personal Loan from a Bank or Credit Union. We begin with this generalization: Banks and credit unions usually offer lower interest rates than other types of lenders. That makes them pretty good places to start your search for a relatively inexpensive loan.

What are the major sources of inexpensive loans?

What is the least expensive source of short term financing?

Trade credit comes from a supplier or vendor who allows customers to buy goods or services on credit. This type of short-term financing is often preferred because it typically does not cost anything and offers the flexibility of paying at a later date.

What is the least expensive source of long term capital?

Option C: Long-term debt is considered the least expensive because its interest payments are tax deductible. Its costs are tax deductible and lower than the cost of preferred stock.

What is generally the least expensive source of capital quizlet?

A: debt.

What are the 2 most common loans?

Gino Rodriguez, Writer. Two common types of loans are mortgages and personal loans.

What is the least expensive form of short term financing quizlet?

Trade credit is the least expensive and most convenient form of short-term financing. Businesses can buy goods today and pay for them sometime in the future.

What is a cheap borrowing?

Cheap money is a loan or credit with a low interest rate or the setting of low interest rates by a central bank like the Federal Reserve. Cheap money is money that can be borrowed with a very low interest rate or price for borrowing.

What is the cheapest form of borrowing in terms of access to credit?

Credit Cards

It's called a cash advance. A cash advance on a credit card incurs no application fees and for those who pay off their entire balance at the end of every month, credit cards can be a source of loans at a 0% interest rate.

Which bank has lowest interest rate on personal loan?

Which is the cheapest source of finance debt or equity?

Since Debt is almost always cheaper than Equity, Debt is almost always the answer. Debt is cheaper than Equity because interest paid on Debt is tax-deductible, and lenders' expected returns are lower than those of equity investors (shareholders). The risk and potential returns of Debt are both lower.

What is the safest way to borrow money?

Personal loans are a relatively safe, tried-and-true way to borrow money for a variety of purposes. They provide a lump sum upfront, which you then repay with interest in monthly installments. Interest rates are typically fixed, making the monthly payments consistent and easier to budget around.

Which types of loans usually cost the most?

1. Payday Loans. Payday loans are popular among individuals with poor credit because they give you cash quickly and they don't usually require a credit check. The problem is that the interest rates are astronomically high — in some cases, more than 500%.

What is the most expensive source of finance?

Preference Share is the Costliest Long - term Source of Finance. The costliest long term source of finance is Preference share capital or preferred stock capital. It is the source of the finance.

What is the most expensive source of financing?

Equity capital tends to be among the most expensive forms of capital as investors may expect a share in profit. There are no tax benefits like the ones offered by debt financing.

What is the cheapest source of fixed capital?

Ans: (d) Retained earnings are the cheapest source of finance. Retained income is the portion of an organization's net income or profits that it keeps after paying dividends. An organization's retained earnings or profits can be reinvested for the purposes of expansion, modernization, and so on.

What is the least expensive cost of capital?

In theory, debt financing offers the lowest cost of capital due to its tax deductibility. However, too much debt increases the financial risk to shareholders and the return on equity that they require. Thus, companies have to find the optimal point at which the marginal benefit of debt equals the marginal cost.

What is the lowest cost type of capital?

Theoretically, the lowest cost of capital is the federal funds rate. The firm's cost of capital is something above this, to make up for the firm's risk of losing the invested capital. Within the firm, however, both equity and debt have their own cost. Debt costs less than equity because interest is tax-deductible.

Why is debt the least expensive source of capital for companies?

Because equity financing is a greater risk to the investor than debt financing is to the lender, debt financing is often less costly than equity financing. The main disadvantage of debt financing is that interest must be paid to lenders, which means that the amount paid will exceed the amount borrowed.

Which one of the following is often the source of the least expensive loan quizlet?

Parents or family members are often the source of the least expensive loans.

Which source of funds is the least expensive in terms of cost and control?

As opposed to external financing, such as debt or equity financing where the company must incur fees to obtain external financing, internal financing is the cheapest and most convenient source of financing.

What is the most common source of capital?