Terms of credit
When a bank lends money to customers, the bank certainly expects the money back. Therefore, to minimize the risk (the money does not return, for example), in giving the bank credit it should consider some things related to the willingness to pay and the ability to pay the customer to repay the loan and the interest thereon. They are Character, Capacity, Capital, Colateral, and Condition of Economy, or are often referred to as 5C (panca C).
Character, nature, habits of debtors (party owed) is very influential on the provision of credit. The creditor (the creditor) can examine whether the debtor's candidate goes into the DOT List or not. For that lender can also examine the biodatanya and information from the business environment. Information from the business environment can be obtained from suppliers and customers of the debtor. It may also be obtained from the Central Bank Information, but can not be obtained easily by the general public, as such information can only be accessed by bank employees in the field of credit by using passwords and computers connected on-line with the Central Bank.
Capacity is related to the ability of a debtor to repay a loan. To measure it, creditors can examine the debtor's ability in the areas of management, finance, marketing, and others.
By looking at the amount of capital owned by the debtor or see how much capital is invested by the debtor in his business, the creditor can assess the debtor's capital. The more capital invested, the debtor will be considered more serious in carrying out its business.
Guarantees are needed in case the debtor can not repay the loan. Usually the guarantee value is higher than the loan amount.
The economic condition surrounding the prospective borrower's residence should also be considered to take into account the economic conditions that will occur in the future. Economic conditions that need to be considered include issues of public purchasing power, market area, competition, technological developments, raw materials, capital markets, and so forth.
What's Pledged In Credit Agreement.
1. Credit period
2. Interest rates
3. How to pay
4. Collateral / credit guarantee
5. Administrative costs
6. Life and bill insurance
Medium and long term credit for investment in capital goods such as factory construction, machine purchase.
Working capital credit
Short or medium term loans granted for financing / purchase of production raw materials.
Loans for individuals for financing personal items such as houses (mortgage-ownership loans), vehicles (Motor Vehicle Credit KKB), others such as Unsecured loans.
Business Loans Without Interest and Unsecured Loans
These credits are reserved for small and medium businesses only. This kind of credit is very easing for entrepreneurs, but the selection stages are very tight, such as People's Business Credit (KUR).