Question

Please DISCUSS the factors should be considered when EVALUATING A LOAN. (ANY FOUR) (as a borrower)

Answer 1

Four conditions which should be considered when evaluating a loan as a borrower are as follows-

A. terms and conditions of the bonds must be looked into as those terms and conditions should be preferred which are flexible in nature and which are available to the borrower.

B.interest rates payable on the loans must be taken into account because these are the periodic payments which are to be made to the lenders so interest rate should be selected which can suit the capability of borrower.

C. Types of various loans must be assessed and those loans should be selected which will suit the the need of the borrower like those bonds who are amortizable or those bonds have fixed payments

D. Collateral is to be considered because such loans are preferable by the borrowers who does not have collateral so, the value of collateral must be considered.