Question

what are the terms of credit explain

Answer 1

Answer:

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. Interest rate, collateral and documentation requirement and the mode of payment mainly come under the terms of credit.

Answer 2

Answer:

TERMS OF CREDIT:

1. Every loan agreement specifies an interest rate which the borrower must pay to the lender along with the repayment of the principal addition, lenders may demand collateral against the loan.

2. Collateral is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid.

3. The interest rate, collateral and documentation requirement, and the mode of repayment together comprise what is called the terms of credit.

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