Why are terms of credit required for a loan or credit?

cbse
economics
money-and-credit
cbse-class-10
cbse-class-10-social

#1

Why are terms of credit required for a loan or credit?

Answer:

  • Terms of credit are required so that the borrower knows the conditions to take the loan.
  • The collateral, in the form of security or guarantee, is given to the lender until the loan is repaid.
  • If the borrower fails to repay the loan, the lender has all the rights to sell the assets or collateral to obtain the payment.