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• The Most important C
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• Capacity to pay on schedule and in cash.
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• Payment schedule fit the borrower’s cash flow. |
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• Extent of the borrower’s disposable income
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• Total monthly debt/net monthly income.
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• Type and terms of outstanding obligations. |
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• Number of dependents that live on the disposable income.
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• The member’s reputation.
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• Is the borrower of good charater?
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• Do they have proven habit of paying their loans?
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• Length of time on the job? |
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• Length of time in the community? |
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• Use all available information to determine this: (information, references)
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• Collateral itself does not pay the Loan. |
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• It is a means of gaining control over some of the borrowers’ assets or capital.
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• Supports for loan approval if the other C’s are weak.
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• Savings, personal property, real property and business assets are forms of security.
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• The loan term should not exceed the useful life of the collateral and loan amount should not exceed the value of collateral.
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• Do not over lend on collateral – provide loans from 50-75% of the appraised value of collateral |
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• Has the member made steady, even if slow growth in assets or is every penny earned immediately spent? |
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• Does the member save consistently at the cooperative? |
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• Are members there just to get a loan?
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• Does the member live beyond his means?
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• Circumstances of the economy, industry, cooperative environment in which the credit is granted.
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• Remember, conditions are peripheral circumstances, they are not a basic principle of credit.
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