Question

Rachita lends money to Priya. After a year, Rachita demands the repayment of the loan. However, Priya denies borrowing the loan. How should Rachita defend her claim and collect the money loaned?

• A. Using the terms of credit
• B. Using a witness
• C. Using violence
• D. Using friends

Answer 1

The correct option is A Using the terms of credit

Whenever a loan is taken, a document comprising all loan-related information is drafted. This documentation is known as terms of credit. It has elaborate details of the loan amount, interest, collateral, date of repayment, and more. Thus, it serves as an evidence of the loan given. Banks always require terms of credit for a loan agreement.