Obligations of Borrowers

• Borrower - an individual, company, or institution that obtains money, goods, or services in the form of a loan from another party
• Types of Loans

  1. Personal Loans
  2. Home Loans
  3. Auto Loans
  4. Business Loans
• Interest - the additional amount paid by the borrower in consideration of the time value of money
• Types of Borrowers

  1. Commercial Borrowers
  2. Retail Borrowers
• Commercial Borrowers - business entities that borrow money to fund startups, operations or expansions
• Retail Borrowers - Individuals who borrow money for personal purposes, such as to buy a home or a car.
• Creditors - a person or organization that is owed money by another person or organization
• Types of Creditors

  1. Real
  2. Personal
  3. Secured
  4. Unsecured
• Real Creditors - those who have a legal claim on borrowers’ assets and properties
• Personal Creditors - individuals that borrowers owe money to, such as friends, family, or businesses
• Secured Borrowers - those who have security interest on borrowers’ assets and properties
• Unsecured Creditors - do not have a security interest in the borrowers’ properties
• Obligations of Borrowers

  1. Repay all debts owed
  2. Provide accurate and timely information
  3. maintain open communication channels
  4. avoid default payments
• Repay all Debts - a moral, legal, and ethical obligation
• Provide accurate and timely information - information on income, expenses, assets, liabilities, etc.
• Maintain open lines of communication - keeping creditors updated on the status of repayments and collateral
• Avoid Default on Payments - can impact credit score and affect the ease of obtaining credit in the future
• Borrowers are people who receive loans from lenders. To qualify for a loan, borrowers usually have to meet specific criteria, such as having a good credit score and a steady income. Creditors set these criteria to determine whether a borrower can repay the loan and has good behavior.