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    Function of Credit

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    Lethal
    The document discusses various types of credit including charge accounts, secured charge accounts, installment accounts, and straight loans. It also covers classes of credit according to user such as consumer credit, industrial credit, trade credit, and mercantile credit. Finally, the document outlines the 5 C's of credit - character, capacity, capital, collateral, and conditions - and provides a brief history of the development of credit in the Philippines.

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    Function of Credit

    Uploaded by

    Lethal
    29 views6 pages
    The document discusses various types of credit including charge accounts, secured charge accounts, installment accounts, and straight loans. It also covers classes of credit according to user such as consumer credit, industrial credit, trade credit, and mercantile credit. Finally, the document outlines the 5 C's of credit - character, capacity, capital, collateral, and conditions - and provides a brief history of the development of credit in the Philippines.

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    The document discusses various types of credit including charge accounts, secured charge accounts, installment accounts, and straight loans. It also covers classes of credit according to user such as consumer credit, industrial credit, trade credit, and mercantile credit. Finally, the document outlines the 5 C's of credit - character, capacity, capital, collateral, and conditions - and provides a brief history of the development of credit in the Philippines.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    29 views6 pages

    Function of Credit

    Uploaded by

    Lethal
    The document discusses various types of credit including charge accounts, secured charge accounts, installment accounts, and straight loans. It also covers classes of credit according to user such as consumer credit, industrial credit, trade credit, and mercantile credit. Finally, the document outlines the 5 C's of credit - character, capacity, capital, collateral, and conditions - and provides a brief history of the development of credit in the Philippines.

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    © All Rights Reserved
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    You are on page 1of 6

    CREDIT AND COLLECTION

    BASIC FUNCTION OF CREDIT

    1. Economic Function
    • Medium of Exchange
    • To make capital available

    2. Social Function
    3. Business Promotion
    CLASSIFICATION OF CREDIT

    • Charge Account - consist of granting of credit on the mere


    signature of the customer/credit or authorized representative.
    • Secured Charge Account - refers to the extension of credit and
    aside from signature of the customer/client, additional collateral
    are required.
    • Installment Accounts - the account is payable in installments,
    usually monthly. Ex. Car loan, housing loan or salary loan.
    • Straight Loans - loans in the form of money or equivalent usually
    granted by banks and other financing institutions.
    CLASSES OF CREDIT ACCORDING TO TYPE
    OF USER

    • Consumer Credit - when the property or service thus acquired


    is used for the personal benefit of the credit grantee.
    • Industrial Credit - when it is used for business.
    • Trade Credit - when the thing purchased is to be used in
    connection with the business of the obligator.
    • Mercantile Credit - Credit which one businessman may extend
    to another when selling goods on time for resale or
    commercial use.
    5 C’s OF CREDIT

    • Character - this refers to a borrower’s reputation or record


    concerning financial matters.
    • Capacity - this reflects the ability to repay a loan or other financial
    agreement.
    • Capital - this consist of a person’s real and personal property which
    can be a strong foundation for credit approval.
    • Collateral - this is something of value, the debtor asset’s as pledge.
    • Conditions - this may include stability of employment, local business
    condition or economic conditions during a time of loan application.
    HISTORY OF THE DEVELOPMENT OF CREDIT
    IN THE PHILIPPINES
    • In the earlier times, years before the last world war, credit was synonymous with debt with
    all its negative connotations.
    • To the rich and poor alike, it was more of a stigma to avail of credit and to have no debt
    was viewed as a status symbol.
    • Credit transaction then attracted mostly people with not so good credit standing.
    • In 1932, there was already an Association of Credit Men, Inc. Taking care of the credit needs
    of the metropolitan areas.
    • After World War II and during the process of rehabilitation, business began to pick up.
    • Credit was needed because there was a big market but people simply did not have the cash
    to buy.
    • Goof credit risk customers started to drop and this was further deteriorated by cut throats
    competition in credit sales.
    • To make matters worse for the credit men, our legislature thru the years pass laws after
    laws, favoring debtors and neglecting creditors.

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