Question

John Camey is thinking about buying a used car and getting a loan for this purchase. The car he is interested in purchasing is a 2003 Volkswagen Bug. The banker who is considering making the loan has inspected the car and determined it is in excellent condition with low mileage and no history of problems. When the banker inspects the car, which of the 5 C's of lending is he concerned with?

Answer 1

Answer: collateral

Step-by-step explanation:

Based on the scenario in the question, the banker is concerned with the collateral. Collateral is what is pledged by a borrower to a lender and in case the borrower doesn't pay back his or her loan, the collateral will be forfeited.

In this case, the banker is inspecting the car to see if it's in good condition in order to know if it's worth been used as a collateral and in case John doesn't pay back his loan, the car will be collected from him.