Final answer:
True, a commitment fee is often assessed by banks when a line of credit is granted. This fee is for making credit available, and it is one of the various terms and conditions associated with borrowing from a financial institution, alongside income verification, credit checks, potential cosigners, and collateral requirements.
Step-by-step explanation:
True: When a bank grants a line of credit, a "commitment fee" is often assessed at the start of the loan. This fee is charged by financial institutions for making a line of credit available to the borrower, even if the total credit amount is not used.
Besides the commitment fee, banks carry out several diligence processes before issuing a loan. Prospective borrowers must provide information on their sources of income and undergo a credit check to assess their borrowing history. Further credit security measures can include the requirement of a cosigner or collateral, such as property or equipment, which the bank can seize if the loan is not repaid.
The conditions and fees, such as the commitment fee, are part of the responsibilities and obligations that borrowers should be aware of before entering into a financial agreement with lending institutions. Being knowledgeable about these factors can greatly impact borrowing decisions and financial well-being.