What is a 'Marginal Lender'

A marginal lender is a lender that will only make a loan at or above a particular rate of interest.

BREAKING DOWN 'Marginal Lender'

A marginal lender should not be confused with a margin lender, which is a brokerage that lends money to investors who wish to make trades with borrowed funds using collateral they already own. Margin trading is risky because it can amplify investment losses.

A marginal lender should also not be confused with marginal lending, which is the overnight liquidity provided to banks through the European Central Bank's marginal lending facility against the presentation of sufficient eligible assets. It is the equivalent of the Federal Reserve's Discount Window in the United States. The interest rate on these loans is called the marginal lending rate, and is one of the three interest rates the ECB sets every six weeks as part of its monetary policy. The two other interest rates are the deposit facility rate, the interest banks receive for depositing money with the central bank overnight, and the MRO rate, which is the cost of borrowing from the central bank for one week.

RELATED TERMS
  1. Lender

    A lender makes funds available with the expectation that the ...
  2. Net Interest Margin

    Net interest margin is a metric that examines how successful ...
  3. Subprime Lender

    A subprime lender specializes in lending to borrowers with a ...
  4. Securities Lending

    Securities lending is the act of loaning a stock, derivative ...
  5. Origination Fee

    An origination fee is an up-front fee charged by a lender for ...
  6. Collateral

    Collateral is property or other assets that a borrower offers ...
Related Articles
  1. IPF - Mortgage

    What Are the Main Types of Mortgage Lenders?

    Shopping for a mortgage lender can feel confusing and a little intimidating. Understanding the differences among the main types of lenders can help you narrow down the field.
  2. Insights

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  3. Personal Finance

    Can't Get A Bank Loan? Turn To Your Neighbor

    Peer-to-peer lending can be an inexpensive way to gain access to credit when banks are restricting lending -- but you need to understand the entire deal first before jumping in.
  4. Investing

    How to Get the Money to Flip a House

    If you want to get into house flipping but don't have the cash to invest, read on for options.
  5. Personal Finance

    What Is Collateral?

    Collateral is property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup ...
  6. Personal Finance

    How Many Mortgage Lenders Should You Apply to?

    Applying to multiple mortgage lenders can get you a better deal, but it comes with a few drawbacks.
  7. Personal Finance

    Peer-to-Peer Lending Breaks Down Financial Borders

    Banks are no longer the only option for a loan - the P2P lending system operates without them.
  8. Personal Finance

    Mortgage broker versus direct lender: Which is best?

    Understand what are the key differences between mortgage brokers and direct lenders. Learn which one fits best with your lending needs and which one is more convenient.
RELATED FAQS
  1. Does inflation favor lenders or borrowers?

    Find out under what circumstances inflation benefits borrowers more than lenders and in which situations inflation can be ... Read Answer >>
  2. What’s the Difference Between a Mortgage Lender and a Mortgage Servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Hot Definitions
  1. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  2. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  3. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  4. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  5. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  6. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
Trading Center