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1.
Character - Will the member be willing to repay
the loan? Does the member have a sense of responsibility
for his/her obligations? How has this sense of responsibility
been demonstrated?
2. Capacity - Will
the member be able to repay the loan? What are the financial
circumstances of the member? Has the member done any calculations
of the family budget to determine his/her ability to repay
the loan? Are other sources of income depended upon to
make these payments and are these sources stable?
3. Collateral - Collateral
may make the loan safe, but not necessarily sound. Provides
incentive for member to repay the loan. Provides a means
of at least partial recovery if loan defaults. Collateral
should not be considered as a source of repayment.
4. Capital - Provides
a cushion for repayment in the event of the member having
a financial setback. Indicates an ability and willingness
of the member to save and accumulate assets. Confirms
that the borrower manages his/her financial affairs adequately
and within his/her income. Lack of accumulated worth could
be a danger signal unless the applicant is fairly young.
5. Credit - Represents
accumulated experience of the member's habits in performing
credit obligations. Provides a record of past credit experience.
If there is a problem, a full and satisfactory explanation
should be received. |
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