Question

What is the first step typically taken by most lending institutions to recover funds lent to the borrower?

a) Repossess the collateral pledged by the customer to support the loan
b) Contact the customer to arrange for repayment of the loan
c) File for a legal judgment against the customer
d) Garnish the borrowing customer's wages

Answer 1

The first step typically taken by most lending institutions to recover funds lent to the borrower is to contact the customer to arrange for repayment of the loan.

Step-by-step explanation:

The first step typically taken by most lending institutions to recover funds lent to the borrower is to contact the customer to arrange for repayment of the loan. This is done through phone calls, letters, or other means of communication to remind the borrower of their outstanding debt and to discuss potential repayment options. It is important for the lending institution to establish communication with the borrower before proceeding with other steps, such as repossessing collateral or filing for a legal judgment.