Factors that impact rate and amount of your loans & borrowing

loans and borrowing

Level - BASIC

Borrowers need to convince lenders about their ability and willingness to repay on the basis of collateral, income statements or credit scores. Watch this video to learn about the factors that influence amounts and rates for formal loans.

AUTHOR(S): Uma Shashikant

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Loans and Borrowing

 Borrowers need to convince lenders about their ability and willingness to repay on the basis of collateral, income statements or credit scores. Watch this video to learn about the factors that influence amounts and rates for formal loans.

1 2 3 4 5

    1.Which of the following factors is NOT considered while deciding the rate at which the loan is offered?



  • Whether the loan is secured or unsecured
  • Your current income
  • Your credit score
  • 2.What does the Credit score indicate?



  • Your willingness to pay back the loan
  • Your ability to payback the loan
  • Amount of outstanding debt that you have
  • 3.Ideally EMIs or loan repayment should form what percent of your income



  • 75% to 80%
  • Below 40%
  • 50% to 60%
  • 4.Which of the following is used to determine your ability to payback the loan?



  • Your personal stake in the asset for which you are availing the loan
  • Your Credit score
  • Your current and potential future income
  • 5.What is the advantage of offering a collateral when taking loan?



  • It guarantees you a loan
  • It reduces the rate of borrowing for the loan
  • It improves your credit score
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