Podcast
Questions and Answers
Which of the following factors does NOT directly affect the size of a loan?
Which of the following factors does NOT directly affect the size of a loan?
What does the loan percentage determine?
What does the loan percentage determine?
Which of the following best defines guarantees in the context of loans?
Which of the following best defines guarantees in the context of loans?
How is the repayment period for a loan characterized?
How is the repayment period for a loan characterized?
Signup and view all the answers
What accurately describes interest rates at commercial banks?
What accurately describes interest rates at commercial banks?
Signup and view all the answers
Study Notes
Factors Affecting Loan Amount
- Loan amount depends on several factors
- Item and price (car, house, trip, or wedding costs)
- Borrower's income
- Ability to repay (subtracting other commitments like rent, school fees)
- Lender's terms and conditions (financing percentage, repayment period, interest rate)
- Required collateral
Loan Guarantees
- Collateral (physical or non-physical) is required by the lender to ensure the borrower's commitment to repay
- Guarantees are provided by the borrower to assure the lender of their seriousness and repayment intentions
Financing Percentage
- Financing percentage represents the contribution of both the borrower and lender to the total loan amount
- For example, if a car costs 10,000 dinars, the lender might provide 80% (8,000 dinars), and the borrower would contribute the remaining 20% (2,000 dinars)
Repayment Period
- This is the agreed-upon timeframe for repaying the loan
Interest Rate (Commercial Banks)
- Interest rate is the extra amount lender charges borrower on the principal loan amount.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz explores the various factors that influence loan amounts, including the borrower's income, collateral requirements, and repayment terms. Additionally, it covers financing percentages and interest rates that impact lending decisions. Test your understanding of these crucial financial concepts!
