<ul>
<li>Main users of overnight lending are banks. Banks have large in- and out-flows from customers on a daily basis. They typically borrow to meet a temporary outflow.</li>
<li>There is a term premium for borrowing at longer terms. By implication, borrowing overnight is theoretically the cheapest financing cost. Financial entities will borrow overnight to finance portfolios.</li>
</ul>

CC BY-SA 4.0
2020-07-11T03:42:23.460Z
2020-07-11T03:42:23.460Z
Brian Romanchuk
<p>As far as I understand an overnight loan is a loan that is settled the next day.</p>
<p>Who are the entities that would find it useful to take a loan just for a day? and, what would they use an overnight loan for?</p>

CC BY-SA 4.0
2020-07-11T02:00:53.227Z
https://en.wikipedia.org/wiki/Overnight_market
Brian Z
<debt>
What are the uses of overnight loans?
user3181821
# What are the uses of overnight loans?

(Asked by: username_0 on 2020-07-11)

As far as I understand an overnight loan is a loan that is settled the next day.

Who are the entities that would find it useful to take a loan just for a day? and, what would they use an overnight loan for?

**Tags:** debt
> **Comments:**
> **username_1**: https://en.wikipedia.org/wiki/Overnight_market  

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## 1 answers

### Answer by username_2 on 2020-07-11. Score: 2 | Accepted answer

* Main users of overnight lending are banks. Banks have large in- and out-flows from customers on a daily basis. They typically borrow to meet a temporary outflow.
* There is a term premium for borrowing at longer terms. By implication, borrowing overnight is theoretically the cheapest financing cost. Financial entities will borrow overnight to finance portfolios.


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