LESSON 6-Loan Function and Credit Management

Front

What is the primary function of bank credit?

Back

The primary function of bank credit is to advance funds to individuals or businesses under an agreement where borrowers are trusted to repay the principal and interest.

Front

What are the two main categories of loans offered by banks?

Back

The two main categories of loans offered by banks are consumer loans and commercial loans.

Front

What is a consumer loan?

Back

A consumer loan is a type of loan available to individuals for financing specific expenses, such as purchasing real estate or vehicles.

Front

What are personal loans?

Back

Personal loans are flexible consumer loans that can be used for various daily needs, such as paying bills or settling debts.

Front

What is the purpose of student loans?

Back

Student loans are offered to eligible students to cover tuition and other school-related expenses.

Front

What is a home loan or mortgage?

Back

A home loan is used for purchasing a house, lot, or condominium, and can also be used for home construction or renovation.

Front

What is the function of the credit department in a bank?

Back

The credit department manages the credit process, including setting credit policies, evaluating creditworthiness, and managing collections.

Front

What is creditworthiness?

Back

Creditworthiness is the assessment of a borrower's ability to repay a loan based on their financial history and current financial status.

Front

What is a revolving line of credit?

Back

A revolving line of credit is a financial arrangement where a bank issues a maximum credit limit to a business, allowing them to borrow and repay as needed.

Front

What is accounts receivable financing?

Back

Accounts receivable financing allows a business to borrow money against its outstanding invoices.