FNS40815 Certificate IV in FINANCE & MORTGAGE BROKING Assessment 1

This document provides a comprehensive solution to a finance assignment, specifically addressing the FNS40815 Certificate IV in Finance & Mortgage Broking. The assignment covers various aspects of credit products, including car loans, personal loans, credit cards, and consolidation loans, detailing their features and application requirements. It also explores the credit application process, assessing a client's understanding of credit and outlining how to assist clients with different levels of knowledge. The document further explains the key features of a financial services provider's credit assessment policy based on responsible lending principles and the role of the National Credit Code in identifying loans for personal versus business purposes. Additionally, it describes the main types of security required for small business loans, such as mortgaging assets and personal guarantees, providing a thorough understanding of credit and lending practices.

FNS40815 Certificate IV in FINANCE & MORTGAGE BROKING
FNSCRD301 Process applications for credit
Assessment 1 - Knowledge
FNS40815_ FNSCRD301 Assessment 1 Knowledge
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Activity 1
Refer to your Learner Guide and the guide ‘Money Smart - Types of Credit’, located in the
Additional Resources folder and respond to the following:
Your supervisor has asked you to provide information to clients about different credit
products.
Compete the table below to demonstrate to your supervisor your understanding of credit
products and their application.
(List the features of credit products and their application requirements)
Activity 1 Answer
Type of Credit Explanation Advice that you should provide to
the client about the product
Car loan
The Car Loan is quite helpful
so that the different types of
customers are able to ensure
that they can get the required
amount of money so that they
are able to purchase a car.
This will help them in ensuring
that they are able to purchase
a car of their choice.
The advice which can provided to the
client about this product is that the client
should take a Car Loan according to
their income and thus they should make
sure that they are able to effectively and
efficiently manage their needs and
requirements in a proper manner.
Personal loans
The Personal Loan is very
helpful in ensuring that the
wide range of personal needs
and requirements quite
effectively and efficiently.
The advice which can be provided to
the client about the Personal Loan is
that the clients should be able to make
sure that they are able to provide their
different types of details about income
so that they are able to achieve their
personal goals and objectives.
Credit cards The Credit Cards are very
useful because by making
their use the wide range of
goals and objectives can be
attained.
The advice which can be provided to
the client regarding Credit Cards is that
the credit limit is determined on the
basis of the basis of the income level of
the clients.
Consolidation
loan
In this type of loan, the
various types of debts like
The advice which can be provided to
the clients regarding this loan is that
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Credit Card Bills, Loan
Payments etc. can be rolled
into one monthly payment
which will be quite helpful in
ensuring that the
simplification of the payments
can be done in the right
manner.
they should consolidate all their
payments which will help them in
determining the appropriate amount of
payment to be done.
Activity 2
Refer to your Learner Guide and the guide ‘Money Smart - Types of Credit’, located in the
Additional Resources folder and respond to the following:
You have asked the following questions to check a client’s level of understanding and
knowledge regarding credit application processes:
 What types of credit are available in Australia?
 Do you know the costs associated with credit?
 Do you know what a debt collector is?
Now complete the table below by describing how you can assist the special needs and
requirements of a client according to the level of knowledge and understanding they have
demonstrated when answering the above questions.
(Identify ways of obtaining and checking relevant information from applicants)
Activity 2 Answer
Level of Understanding Description of action or assistance that
should be provided
Level 1: No or a limited
understanding
In Australia, the various types of Credit Cards
like American Express, Bankcard, Diners Club,
MasterCard, VISA are available which can be
used so that the credit limit of the customers can
be set in the right manner.
Level 2: Some level of
understanding
There are a wide range of costs which are
associated with Credit like the Credit Card Fees,
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Cost of procuring loans etc.
Level 3: A higher level of
understanding
A Debt Collector refers to the person who has
been assigned the authority so that the different
types of debts can be collected in the right
manner effectively and efficiently which will help
in ensuring that the timely collection of the debts
can be done.
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Activity 3
Explain the key features of a financial services provider’s credit assessment policy based on
the principles of responsible lending.
(Explain key features of organisational policy and procedures that relate to credit
assessments, security and customer service)
Activity 3 Answer
The features of this policy can be explained as follows-
 The policy should be helpful in ensuring that the different types of financial services
can be managed in the right manner.
 The policy can be very useful in ensuring that the lending of the various types of
loans is done in a responsible manner which will lead towards ensuring that the
loans are provided to the people in the right manner which will help in ensuring their
repayment of time.
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Activity 4
The purpose of the National Credit Code is to provide protection for consumers who enter
into credit contracts for personal purposes. How does the legislation identify whether a loan is
for personal purposes, as opposed to business purposes?
(Explain the key purpose of relevant credit legislation, statutory requirements and codes of
practice, covering: consumer credit; personal property securities; privacy)
Activity 4 Answer
National Credit Code refers to a particular reform process in which the licensing of the
different types of people can be done which will help a lot in ensuring that the appropriate
amount of credit can be provided. The legislation provides a lot of detailed guidelines
regarding the segregation of the different types of loans. The loans can be segregated in
the categories like Loans for Personal Purposes as well as Loans for Business Purposes.
According to the National Credit Code, the identification of the different types of needs and
requirements of the customers can be done in the right manner. Thus the legislation is
able to identify the needs and requirements of the applicant who is applying for the loan.
If the loan is being taken for Personal Purposes then the different types of personal
requirements will be mentioned by the customers in the Loan Application Form. Also the
rate of interest on the Personal Loan is comparatively higher as compared to the Business
Loan because it is being taken for Personal needs and requirements.
If the loan is being taken for Business Purposes then the wide range of business
requirements will be mentioned by the customers in the Loan Application Form. The rate of
interest on this type of loan will be comparatively lower as compared to the loan taken for
the personal purposes.
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Activity 5
When taking out a business loan a lender will often want to secure the loan in the form of an
asset. This security is intended to minimise risk exposure in the event the applicant is unable
to repay the loan.
Describe the main types of ‘security’ that may be required to obtain a small business loan.
(Explain types of security)
Activity 5 Answer
Collateral security is often desired by the lenders so that they are able to make sure that
they are able to secure the loan which will be provided by them. It is often required for
obtaining loans which have a higher amount as well as value which will help a lot in
ensuring that the loan processing can be done effectively and efficiently in a proper
manner. The types of security which can be provided for a small business loan are as
follows-
 Mortgaging Assets- The different types of assets of the business can be kept as a
mortgage which will be quite helpful in ensuring that the business is able to
effectively and efficiently manage out the credit needs and requirements.
 Personal Guarantee- The Personal Guarantee which is provided by the business
can be required so that the Business Loan which is being taken in order to manage
a wide range of business operations can be secured in the right manner.
Thus, In this way it can be said that the use of Collateral Security can be made which will
be quite helpful in ensuring that the loans of higher amount can be obtained in the right
manner. The keeping of this type of security will be quite helpful in ensuring that the
various types of loans are obtained from the reputed financial institutions. In this way, it
can be said that the Businesses are able to ensure that they can keep the appropriate
amount of security to be able to help in the procurement of big amounts of loan which will
help in managing the different types of operations quite effectively and efficiently in a right
way.
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