What does "cost of funds" mean?

What does "cost of funds" mean?

James Bell (Publisher, Auto Reviewer) gives expert video advice on: What does "balloon payment" mean?; What does "base value" mean"?; What does "buy here, pay here" financing mean? and more...

With regards to financing your car, cost of funds is in essence the interest rate. How much the person who is lending you the money is going to be making in exchange for providing you with that lump sum of money in the first place. So, the cost of funds is going to be that APR or that interest rate that's above and beyond the lump sum that you're borrowing.