Credit Analysis with 5 of C

1. Character is the nature or character of the customer. In this analysis to determine the nature or character of a loan applicant, whether he has the character or nature of being responsible for the credit he takes.

From this character or character, you will see a willingness to pay in any difficult conditions. However, on the other hand if the customer does not have the nature to pay, the customer will try to avoid paying for various reasons, of course.

This character will be seen from the customer's past through observation, experience, curriculum vitae, and the results of interviews with customers

2. Capacity, the analysis used to see the ability of customers to pay credit. This ability can be seen from personal income for consumer loans and businesses financed for trade or productive credit. This ability is important to assess so that banks do not experience losses.

To assess the ability of customers can be assessed from the documents owned, the results of confirmation with those who have the authority to issue certain letters, the results of interviews or through the calculation of financial ratios.

3. Capital, is to assess the capital owned by customers to finance loans. This is important because the bank will not finance the loan 100 percent. This means that there must be capital from the customer. The goal is that if the customer also has capital invested in the activity, the customer will also feel ownership so that it motivates to work seriously so that the business is successful and able to pay its credit obligations

4. Condition, namely general conditions at this time and in the future, of course. Conditions that will be assessed, especially the current economic conditions, is it feasible to finance credit for certain sectors. For example certain crop production conditions are booming the market. Thus, credit for the sector is otherwise reduced. Other conditions that must be considered are environmental conditions, for example security conditions and social conditions of the community.

5. Collateral is a guarantee given by a customer to a bank in the context of the credit financing he proposes. This collateral is used as a last alternative for banks to be prepared in the event of a breakdown of financed credit.

Why guarantee is the last assessment of 5 of C. This is because the most important is the above assessment. If it is feasible, collateral is only an addition, just in case because there are unavoidable factors that cause bad credit, such as natural disasters. In addition, to motivate customers to pay because the collateral is being held by the bank.

Share this post

(adsbygoogle = window.adsbygoogle || []).push({});