discount points

discount points definition - business

discount points

A fee paid by a borrower to a lender in return for reducing the interest rate on a loan. A point is equal to 1% of the amount borrowed, and points are generally paid when a loan closes. Points increase the effective rate on a loan above the stated rate.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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