What is the cost of credit rate

Credit cost refers to the cost incurred by the bank in the process of credit, from the borrower's point of view, including the loan interest rate or discount rate, guarantee fee, appraisal fee, insurance fee, notary fee, collateral registration fee, and other handling procedures. The content is introduced as follows:

1. Loan interest rate or discount rate: the loan interest rate is based on the People's Bank of China's benchmark lending rate for the same period of time, determined by the lending bank according to the qualifications of the enterprise, the mortgage security situation and other factors. At present, the People's Bank no longer stipulates the upper limit of floating lending rate, and the specific upward fluctuation rate is decided by each bank.

2. Bills discount interest rate: floating between the People's Bank of China rediscount rate and the lending rate. Therefore, the cost of note financing is lower than the cost of loan financing under the condition of the same amount and term.

3. Guarantee Fee: When an enterprise has a loan guaranteed by a guarantee institution due to insufficient collateral, it shall pay a guarantee fee to the guarantee institution. The guarantee fee is 0.8-3%/year of the loan amount.

4. Appraisal Fee: When pledging assets to banks or guarantee institutions, banks or guarantee institutions often require enterprises to hire asset appraisal institutions to appraise the pledged assets, which are generally charged at a certain percentage of the appraised value.

5. Insurance fee: the collateral for insurance to the insurance company to pay the fee.

6. Notarization fee: the fee paid for notarization of the loan contract, mortgage contract, asset evaluation report and insurance policy (whether notarized or not varies from bank to bank).

7. Collateral Registration Fee: the fee to be paid to the registration authority when registering the collateral.

8. Other: such as the handling fee for discounting bills.

For the bank's credit cost (creditcost) should refer to credit losses as a percentage of total loans, generally with loan impairment losses divided by the weighted average of total loans.