2 min read
Definition
Risk-based pricing means a lender tailors the rate to the borrower's risk. A company with strong affordability, a clean credit record and sensible gearing is priced lower than a riskier one, because it is less likely to default.
Why it matters
It means the effort you put into your numbers pays off directly in a better rate. Improving your creditworthiness and cash flow before applying can materially lower the cost. See reducing loan cost.
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