The document discusses various documents used in credit transactions, including for credit evaluation and approved credit applications. It covers documents like income tax returns, bank statements, proof of income, employment, and ownership for individual and corporate applicants. It also outlines promissory notes, deeds of conditional sale, and other instruments used for approved credit applications.
The document discusses various documents used in credit transactions, including for credit evaluation and approved credit applications. It covers documents like income tax returns, bank statements, proof of income, employment, and ownership for individual and corporate applicants. It also outlines promissory notes, deeds of conditional sale, and other instruments used for approved credit applications.
The document discusses various documents used in credit transactions, including for credit evaluation and approved credit applications. It covers documents like income tax returns, bank statements, proof of income, employment, and ownership for individual and corporate applicants. It also outlines promissory notes, deeds of conditional sale, and other instruments used for approved credit applications.
The document discusses various documents used in credit transactions, including for credit evaluation and approved credit applications. It covers documents like income tax returns, bank statements, proof of income, employment, and ownership for individual and corporate applicants. It also outlines promissory notes, deeds of conditional sale, and other instruments used for approved credit applications.
Documents used in Credit transactions can be classified into 2 types
1.) those used for credit evaluation to eventually approve or disapprove an applicant. 2.) those used to document an approved credit transaction.
DOCUMENTS REQUIRED FOR CREDIT EVALUATION
1. ITR- income tax returns 2. B/S- bank statements 3. BOD- board of directors 4. OCT- original certificate of title 5. SEC- securities and exchange commission 6. F/S- financial statements 7. DTI- department of trade and industry 8. SN- serial numbers 9. TCT- transfer certificate of title 10.TIN- tax identification number
DOCUM ENTS USED IN CREDIT APPLICATIONS
OFW/OCW EMPLOYEE SELF-EMPLOYED CORPORATION Passbook or A. Proof of Income Remittance & Financial Documents(amt ITR 3 years, FS, BS 3 ITR 3, feasibility study cash flow, Stability &re gularity) Pay Stub/ Pay Slip months BS 3 months B. Proof of Employment and Appointment Articles of Incorporation, DTI/SEC Owne rship Papers DTI, permits registration permits C. Character Refere nces D. Proof of Authorization for married applicants only BOD Resolution E. Other Assets Listed in their credit Application F. Collateral copies of OCT/TCT, tax declaration, proof of how property was acquired, ce rtification that
PROOF OF INCOME refers to the mount and regularity of remittance.
ITR- will show the gross and taxable income of individuals. In calculating an applicant's capacity to pay gross and taxable income should not be used. ITR of self- employed individual is not reliable. Pay Stub/Pay Slip- best source of information in calculating the capacity to pay. BS- a listing of the activities in an account; deposits, withdrawals and bank charges. Tells the credit evaluator how he handles his checking account: did some checks bounce or were returned, due to insufficiency of funds? Does the applicant kite? KITING- is the practice of issuing a check even if at the time of issuance there is no sufficient money in the checking account DTI and BUSINESS PERMITS. Is required for every establishments. Depicts the registry (legality) of the business.
ARTICLES OF INCORPORATION AND BY LAWS (its uses to lenders)
1. to determine the corporate life, that is if the corporation still exists(corporation have a life of 50 years, renewable at its option) 2. to determine if the credit application is within the powers of the corporation; a corporation cannot go outside of its declared primary purpose 3. to obtain more potential sources of information through the incorporators listed in the articles of incorporation 4. to determine if the paid-up equity of the corporate applicant matches the amount to be borrowed
SEC REGISTRATION- indicates the birth of the corporation, without it corporation
will cease to exist and that they cannot transact. REFERENCES- guarantor/co-maker LIST OF OTHER ASSET- asset owned paid and unpaid PROOF OF AUTHORIZATION- other applicants are required to have the consent of their spouses. CORPORATION- Board Resolution- allowing the holder to apply for credit and the lender to conduct investigation. SPA- special power of attorney (individuals representing another). PROOF OF COLLATERAL- copies of the title to be used as collateral such as: copies of tax declaration (classifies property: commercial, residential, industrial, or agricultural); copies of tax receipts (current); proof of how property was acquired(deed of extra judicial-for inherited property and deed of sale- if purchased); Certification from DAR; certification from local courts. DOCUMENTATION AND INSTRUMENTS USED FOR APPROVED CREDIT APPLICATION 1. PROMISSORY NOTE- the most important credit instrument, the most solid evidence of debt, its other name is pronote, a promissory note is a promise to pay a specified amount at a certain period of time
CLASSIFIED INTO TWO:
*NEGOTIABLE- can be purchased, sold, or used as a collateral for a loan, for it to be negotiable it has to comply with the requirements of the negotiable instruments law. *NON-NEGOTIABLE- cannot be transferred from one hand to another
DEED OF CONDITIONAL SALE- in selling of appliances on credit, appliance
companies uses a deed of conditional sale, the seller transfer the possession but not the ownership, it is also called as deed of conditional sale. by withholding or reserving ownership, 2 issues will crop-up: 1. the right of repossession- the seller can retake the merchandise in case of non- payment for 2 consecutive monthly installments 2. who bears the loss in a fortuitous event? - the buyer. At first you might think it’s the company but since possession was already transferred and that delivery was already made the buyer now bears the loss, the reason why ownership was withheld by the seller is due to the fact that he wishes to ensure that payment is made responsibly by the buyer (article 1504).
DEED OF ABSOLUTE SALE- transfer of ownership and possession. Example:
motorcycle was purchased in account- ownership must be transferred so that it can be registered with the LTO- to ensure that payment is made a chattel mortgage must be signed using the vehicle as collateral DISCLOSURE STATEMENT- this is a document where the lender must show the true cost of the credit it is providing. LETTER OF CREDIT- mode of payment used in import-export transactions.
QUIZ #2: ESSAY
NOTE: SUBMISSIONS IS VIA GOOGLE CLASSROOM, IN ITS DESIGNATED CLASSWORK
