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August 04
Loan Terms: What You Must Know

In the latest edition of Dollars and Sense for Michigan Farm News, John Jones, Senior Vice President of Commercial Lending discusses what borrowers should know before signing on the dotted line.

Here are the top 5 things to keep in mind when it comes to loan terms:

1. Lenders use loan terms and conditions to help manage the risk of potential loan losses and servicing costs.

2. Terms include but not limited to:

    • Interest rate
    • Product, Length and Maturity date
    • Frequency and timing of payments
    • Collateral requirements
    • Disbursement conditions
    • Financial reporting requirements

3. A strong financial position and repayment capacity will generally qualify you for lower interest rate.

4. Borrower’s management abilities and risk management practices are considered when a variance to standard term is being discussed.

5. When a borrow shares more information about their operation, the lender is in a better position to provide options.

Read the full article at Michigan Farm News.

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