What do the "Five C's of Lending" include?

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The "Five C's of Lending" are essential factors that lenders evaluate when determining the creditworthiness of a borrower. These components are:

Character: This refers to the borrower's reputation and track record of repaying debts. Lenders assess character by considering the borrower's credit history and overall trustworthiness.

Capacity: This reflects the borrower’s ability to repay the loan, often evaluated through income, employment stability, and other financial commitments. Lenders look at the debt-to-income ratio to gauge the borrower's financial health.
Collateral: This is an asset that the borrower offers to secure the loan. If the borrower fails to pay back the loan, the lender has the right to seize the collateral. This reduces the risk for the lender.
Capital: The amount of money the borrower has invested in a business or the loan project shows their commitment and financial stability. A higher capital investment indicates that the borrower is more likely to take the loan seriously.
Conditions: These are the terms of the loan as well as the overall economic environment. Lenders evaluate what the money will be used for and how economic conditions might impact the borrower’s ability to repay.

Understanding these