Which of the following is not a part of terms of credit?

The correct answer is Education of borrower

Key Points

• Interest rate: The percentage of the loan amount charged as interest by the lender, a key part of the terms of credit.
• Collateral and documentation: These are assets pledged by the borrower as security for the loan, and documents required to process the loan.
• Mode of repayment: Refers to the method and timeline for repaying the loan, such as monthly installments or lump sum payments.
• Education of borrower: Although lenders may consider the borrower's education level in assessing creditworthiness, it is not part of the formal terms of credit.

Additional Information

• Terms of Credit
  • Terms of credit define the specific conditions under which a loan is granted. They protect both the lender and borrower in the lending process.
• Collateral
  • Collateral is an asset or property pledged by the borrower to secure the loan, which can be claimed by the lender in case of default.
• Documentation
  • Documentation includes identification proof, income statements, credit history, and other documents required for the loan approval process.
• Creditworthiness
  • Creditworthiness is the borrower's ability to repay the loan, which lenders evaluate through factors such as income, credit history, and sometimes education level.