10 Questions
What is a common characteristic of closed-ended loans?
They have a fixed interest rate
Which type of loan is typically used for business purposes?
Term Loan
What is a characteristic of a secured term loan?
It has a lower interest rate
What is the primary difference between a term loan and a closed-ended loan?
Purpose of the loan
What is the typical repayment schedule for a term loan?
Monthly or quarterly
Which of the following is an example of a closed-ended loan?
Mortgage Loan
What is the primary advantage of a secured term loan?
It has a lower interest rate
What is the classification of a term loan that needs to be paid back within 1 year?
Short Term
What determines the maturity date of a term loan?
The loan agreement
What is a common feature of closed-ended loans and term loans?
They have a fixed repayment schedule
Study Notes
Credit Procedure
- Describes the rules for granting credit in recognition of prior learning, applying for credit, and assessing credit applications
- Evaluates credit applicants using various factors, including:
- General business entity
- Supplier payment history
- Banking relationship
- Reliability of financial information
- Financial analysis and trending
- Credit decisions and documentation
- Credit scoring techniques (Expert Opinion, Statistical, or Hybrid)
- Ability to pay bills promptly
- Special process for riskier accounts
- Comparison to peer group companies
Credit Approval and Administration
- Includes terms of sale, terms codes, credit instructions, credit recommendations, and credit files
Credit Process in Philippine Financial Institutions
- Involves initiation, documentation, and closing stages
- Also includes portfolio management
Collection Procedure
- Defines procedures for the collections team to follow
- Aims to be consistent and flexible when necessary
- Includes normal procedures, collection schedule, lockbox system, advance payments, customer deductions, note arrangements, account referral, creditor's extension agreements, bankruptcy proceedings, and allowance for uncollectibles and write-offs
Target Market Identification
- Defines a target market by similar characteristics such as demographics and behaviors
- Refines the definition by specifying details such as shopping habits, preferred brands, and life events
Loan Process
- Involves loan packaging, loan approval, and loans (secured and unsecured)
- Secured loans use assets as collateral, while unsecured loans rely on credit history and income
- Open-ended loans allow repeated borrowing, while closed-ended loans have a fixed balance that decreases with payments
Types of Loans
- Closed-ended loans:
- Mortgage loans
- Auto loans
- Student loans
- Open-ended loans:
- Credit cards
- Lines of credit
- Other loans:
- Consolidated loan
- Pay Day loan
- Business loan
- Education loan
- Personal loan
- Gold loan
- Vehicle loan
- Home loan
- Property loan
- Construction loan
- Equipment loan
This quiz reviews the credit procedure, including rules for granting credit, applying for credit, and assessing credit applications. It covers topics such as evaluating credit data and company considerations.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
