ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Will you pay back the loan?
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Can you pay the loan back?
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What can the bank take if you don’t take back the loan?
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None of the above
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Detailed explanation-1: -Capacity Your capacity refers to your ability to repay loans.
Detailed explanation-2: -A character loan is a type of unsecured loan that is made because of the lender’s faith in the borrower’s reputation and credit. Borrowers are typically able to obtain only small loans by this method.
Detailed explanation-3: -Students classify those characteristics based on the three C’s of credit (capacity, character, and collateral), assess the riskiness of lending to that individual based on these characteristics, and then decide whether or not to approve or deny the loan request.
Detailed explanation-4: -Loan characteristics include the loan size, repayment period, collateral value, number of installments, and application costs among others. Past studies have established the influence of loan factors on loan repayment (Nawai and Shariff, 2010).