Podcast
Questions and Answers
What is a common characteristic of closed-ended loans?
What is a common characteristic of closed-ended loans?
Which type of loan is typically used for business purposes?
Which type of loan is typically used for business purposes?
What is a characteristic of a secured term loan?
What is a characteristic of a secured term loan?
What is the primary difference between a term loan and a closed-ended loan?
What is the primary difference between a term loan and a closed-ended loan?
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What is the typical repayment schedule for a term loan?
What is the typical repayment schedule for a term loan?
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Which of the following is an example of a closed-ended loan?
Which of the following is an example of a closed-ended loan?
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What is the primary advantage of a secured term loan?
What is the primary advantage of a secured term loan?
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What is the classification of a term loan that needs to be paid back within 1 year?
What is the classification of a term loan that needs to be paid back within 1 year?
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What determines the maturity date of a term loan?
What determines the maturity date of a term loan?
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What is a common feature of closed-ended loans and term loans?
What is a common feature of closed-ended loans and term loans?
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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
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Description
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.
