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?
- Borrower's income
- Length of residence at current address (correct)
- Item price
- Existing debt commitments
What does the loan percentage determine?
What does the loan percentage determine?
- The time frame for loan approval
- The lender's contribution vs. borrower's contribution (correct)
- The total repayment amount
- The interest charged over time
Which of the following best defines guarantees in the context of loans?
Which of the following best defines guarantees in the context of loans?
- Assurances requested by the lender for repayment confirmation (correct)
- The repayment schedule agreed upon
- The collateral provided by the borrower
- The total principal amount of the loan
How is the repayment period for a loan characterized?
How is the repayment period for a loan characterized?
What accurately describes interest rates at commercial banks?
What accurately describes interest rates at commercial banks?
Flashcards
Loan Amount
Loan Amount
The amount of money a lender is willing to provide to a borrower, determined by factors like the cost of the item, the borrower's income, and the lender's policies.
Loan Percentage
Loan Percentage
The percentage of the total cost of an item that is covered by a lender. For example, an 80% loan means the lender provides 80% of the cost, and the borrower pays the remaining 20%.
Repayment Period
Repayment Period
The time period within which a borrower must repay the loan amount, including the principal and interest. It can be months, years, or a combination of both.
Guarantees
Guarantees
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Interest Rates
Interest Rates
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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.
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