Question

Describe the terms of credit please points mai dena answers,it is four marker question.​

Answer 1

Answer:

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Every loan agreement specifies an interest rate which the borrower must pay to the lender along with repayment of the principal.

. In addition, lender may demand collateral, i.e., an asset that the borrower owns and uses this as a guarantee until the loan is repaid.

. If the borrower fails to repay the loan, the lender has the right to sell the collateral to obtain payment.

. Terms of credit comprise interest rate, collateral and documentation requirement, and the mode of repayment.

. The terms of credit vary substantially from one credit arrangement to another. They may vary depending on the nature of the lender and the borrower.

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