Under which condition is a higher lending charge to the advance permissible?

Under which condition is a higher lending charge to the advance permissible?

• A. Yes
• B. No
• C. Only with borrower consent
• D. Always permissible

Answer: (A)

The concept being tested is how higher lending charges on an additional advance are allowed under loan agreements. A higher lending charge can be applied to the drawdown as long as it is clearly disclosed and included in the terms of the loan facility. The borrower's consent is effectively given by agreeing to the facility terms and signing the relevant documents, so there isn’t a blanket prohibition on applying such a charge. In other words, this can be permissible when the charge is part of the contractual terms and the borrower has agreed to them. The other options are too absolute or restrictive: it’s not categorically forbidden, not always permissible in all cases, and not limited only to separate consent beyond the signed agreement.

The concept being tested is how higher lending charges on an additional advance are allowed under loan agreements. A higher lending charge can be applied to the drawdown as long as it is clearly disclosed and included in the terms of the loan facility. The borrower's consent is effectively given by agreeing to the facility terms and signing the relevant documents, so there isn’t a blanket prohibition on applying such a charge. In other words, this can be permissible when the charge is part of the contractual terms and the borrower has agreed to them. The other options are too absolute or restrictive: it’s not categorically forbidden, not always permissible in all cases, and not limited only to separate consent beyond the signed agreement.