How do you determine loan prices? Loan-pricing models are key

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Abstract: Competitiveness with other banks is an important issue in determining loan prices, but failing to account for such factors as desired return, cost, risk and credit profile can drastically reduce a lender’s competitive advantage. A better way to set loan prices is to conduct a thorough, objective analysis using a loan-pricing model. This article discusses the benefits of loan-pricing models and suggests that using them can help lenders attract and retain customers with the highest credit quality.