Loan Index (External)
What does it mean
An External Loan Index is any rate where the rate is determined by a third party.
Why does it matter
An External Loan Index is seen as a more fair way to re-price a loan because the rate is set by an outside third party who has no interest in this particular transaction. The risk this presents to the bank however is that it is losing control over the rate charged on its loans, and these changes may or may not jive with the costs of its deposits.
Other Relevant Terms
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Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
