Terms of credit.pptx

hope this helps you to better understand the term of credit

1. T erms of credit Terms of credit are the requirements need to be satisfied for any credit arrangements. It includes interest rate, collateral, documentation and mode of repayment. However the terms of credit vary depending upon the nature of lender, borrower and loan . The four terms of credit are : 1) Interest rate- The borrower has to pay a sum of money as interest along with the prinicipal amout . 2) Collateral - It is an asset that the borrower owns and uses this as aguarentee to the lender until the loan is repaid. 3 ) Documentation- Proper documents of borrowing with all the terms and conditions must be submitted. 4 ) Mode of repayment - The mode through which the borrower will repay the loan must be clearly mentioned.