Pricing & Fees: Rate, Origination, Storage, Insurance

A practical, example‑driven guide for asset‑backed lending. Use the sections below to understand trade‑offs, compute totals, and avoid surprises.

Why this matters

Pricing & Fees: Rate, Origination, Storage, Insurance matters because lenders need a reliable way to translate volatile asset values into stable loan terms.

We start with plain definitions, then work through a two‑step example and a simple calculator so the method is repeatable.

Throughout the guide, we label inputs explicitly and compute total cost so borrowers and investors can compare apples to apples.

Numbers are for illustration only; replace them with your own data and use conservative buffers in live decisions.

Example 1: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Step‑by‑step method

Documentation discipline reduces disputes: describe valuation basis, liquidation path, and waterfall; avoid ambiguous clauses.

Example 2: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Documentation discipline reduces disputes: describe valuation basis, liquidation path, and waterfall; avoid ambiguous clauses.

Example 3: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Worked example & sensitivities

Documentation discipline reduces disputes: describe valuation basis, liquidation path, and waterfall; avoid ambiguous clauses.

Example 4: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Documentation discipline reduces disputes: describe valuation basis, liquidation path, and waterfall; avoid ambiguous clauses.

Example 5: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Documentation & compliance

Documentation discipline reduces disputes: describe valuation basis, liquidation path, and waterfall; avoid ambiguous clauses.

Example 6: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Documentation discipline reduces disputes: describe valuation basis, liquidation path, and waterfall; avoid ambiguous clauses.

Example 7: Assume a collateral value of $100,000 with a haircut of 30%. The advance is $70,000. If storage and insurance add $500 per month and the APR is 12%, total cost depends on hold time; compare 3, 6, and 12‑month scenarios.

Risk controls align incentives: covenants make behavior observable, triggers make action automatic, and buffers buy time during stress.

Decision checklist

State the claim: what is the asset and what makes it valuable?

Validate the number: appraisal, comps, and liquidity discount.

Set buffers: haircut, cash reserve, and time to liquidate.

Write it down: custody, title, UCC‑1, perfection, and waterfall.

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