CLFP Exam - Credit Questions and Answers (Verified Answers)
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Course
CLFP - Credit
Institution
CLFP - Credit
What are the Five C's of Credit & describe them - ️️Character- Lessee's reputation
and performance on past obligations
Cash Flow- Does the lessee have the capacity to repay?
Capital- Does the lessee have the ability to withstand a setback?
Collateral- What is the value of the asset securing...
CLFP Exam - Credit
What are the Five C's of Credit & describe them - ✔️✔️Character- Lessee's reputation
and performance on past obligations
Cash Flow- Does the lessee have the capacity to repay?
Capital- Does the lessee have the ability to withstand a setback?
Collateral- What is the value of the asset securing the lease?
Conditions- Terms of the contract, economic, industry
What are the five areas of focus for financial ratios? - ✔️✔️1. Profitability
2. Activity
3. Liquidity
4. Leverage
5. Cash flow coverage
The chance of not receiving money back in a timely manner and as agreed -
✔️✔️Credit Risk
Receive request, collect data, analysis, and decision - ✔️✔️Credit Process
What are some things needed for credit evaluation? - ✔️✔️-Time in business
-Lessee's industry
-Type of equipment
-Business credit reports
-Owners/principals names and personal credit reports
-Quality of the vendor
-Structure of the lease
-New/used equiment
-Equipment location
What are the 4 origination channels to know? - ✔️✔️Direct, TPO, Vendor, Indirect
The further away from the client... - ✔️✔️...the higher the risk
What do we do to help decide the first "C" of credit - character? - ✔️✔️KYC - know
your client
What are some ways to prevent fraud in credit? - ✔️✔️-Know your client.
-Know your vendor.
-UCC search to determine if another lender has a lien on the equipment.
-Perform background and public record searches
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