The costs that arise from borrowing money from others to finance construction or purchase of assets. This includes interest payments, charges, and fees, etc associated with loans and other arrangements of borrowing. For an entity, financing costs are usually incurred on the money borrowed either for acquisition of additional resources or replacement of existing resources, etc. An entity may get necessary funds by means of bank loans, or though the secondary market by issuing debt, etc.
In personal finance, financing costs can arise from a mortgage on a house, a car loan or a student loan, etc.
These costs are also referred to as debt issuance costs, finance costs, borrowing costs, or cost of finances.
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