CREDIT AND

COLLECTION
 MODULE 8 :
01

02
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The 4C's of
You can simply impress your
audience and add a unique zing
and appeal to your
Presentations.
CREDIT
WHAT IS
CREDIT?
 ✓ Defined as a contract
agreement in which a
borrower receives a sum of
money or something of
value and repays the
lender at a later date,
generally with interest.
( INVESTOPEDIA TEAM Updated
March 07, 2022)
 CREDIT helps you to get the things you
need now, like a loan for a car or a credit
card, based on your promise to pay later.
 * In APPROVING Credit
Application , the 4C's are
things that MUST be
Considered by Lenders.

To know the
CREDITWORTHINESS of the
credit applicant.
✓CHARACTER
✓ CAPACITY TO
PAY
✓CAPITAL
✓COLLATERAL
 • refers to his mental
disposition and his personal
values in relation to credit
commitments

•an applicant's willingness to

PAY is easily PROVED by an
EXCELLENT TRACK RECORD in
previous CREDIT TRANSACTIONS
.
WHAT IF THE APPLICANT DOES
NOT HAVE CREDIT HISTORY???

-The Evaluator will judge his

Willingness to PAY based on
3A's
∆ This refers to applicants "SENSE OF
BELONGINGNESS" in the community .
∆ A person who truly feels belongs to a
community has more motivation to PRESERVE
HIS REPUTATION .
 ∆ a business WILL NOT JUST LET
GO of an enterprises in which he
had invested so much time and
money and which provides him with
an almost perpetual source of
income.
- If the appliance purchased, like
refrigerator, is essential to the debtor who
owns a restaurant , the motivation to PAY
UP and NOT SURRENDER the unit is
unquestionably compelling.
 • This is differently viewed
depending on the type of
applicant .

• FOR AN EMPLOYED
APPLICANT
-Capacity to Pay is
calculated using NET
DISPOSABLE INCOME versus
the MONTHLY INSTALLMENT .
• FOR SELF- EMPLOYED Applicant
- the following are to be considered if the Applicant has
Capacity to PAY , this are :

a) NET BUSINESS INCOME

b) THE STABILITY OF THE ENTERPRISE

c) THE MANAGERIAL CAPACITY OF THE

BUSINESS OWNER
• FOR A CORPORATION
- the following are to be considered:
a)THE MANAGERIAL SKILLS OF THE
KEY EXECUTIVES -

b)THE STABILITY OF THE ENTERPRISE-

c) THE TECHNOLOGY USED -

 • This refers to the borrowers
RESOURCES , whereas the larger
contribution by the borrower ,
decreases the chance of default.
Simply says, the Higher/Larger the
amount You've deposit(for
installment) the bigger the chance
that your loan will approved .
 •This enables a borrower
to secure loans. It gives the
lender the assurance that if the
borrower defaults on the loan, the
lender can get something back by
repossessing the collateral.
This can be a PROPERTY like : LAND , CAR,
HOME, or any ASSETS that borrower
OWNED.
 END
OF
PRESENTATION