ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Banks generally make money by borrowing money from depositors and compensating them with a certain interest rate. The banks will lend the money out to borrowers, charging the borrowers a higher interest rate and profiting off the interest rate spread.

Detailed explanation-2: -The risk that borrowers do not repay their loans For each loan that it makes, a bank will assess the risk that a borrower does not repay their loan (that is, the credit risk). This will influence the revenue the bank expects to receive from a loan and, as a result, the lending rate it charges the borrower.

Detailed explanation-3: -They make money from what they call the spread, or the difference between the interest rate they pay for deposits and the interest rate they receive on the loans they make. They earn interest on the securities they hold.

Detailed explanation-4: -Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.

Detailed explanation-5: -1. Your credit score. Lenders use your credit score and history to set private student loan interest rates. Typically, the better your credit, the more likely a lender is willing to finance a loan at a lower rate.