What key document confirms a borrower’s commitment to repay a loan?

• A. Credit report
• B. Tax return
• C. Promissory note
• D. Loan application

Answer: (C)

The promissory note is a crucial legal document that serves as an acknowledgement of a borrower's obligation to repay a loan. It outlines the terms of the loan, including the principal amount, interest rate, repayment schedule, and any other conditions related to the borrowing arrangement. By signing the promissory note, the borrower formally agrees to these terms, creating a binding obligation to repay the lender as specified. This document provides legal protection to the lender and can be used in court if necessary to enforce repayment.

The other documents listed, while related to the lending process, do not confirm the borrower's commitment to repay. A credit report provides an overview of the borrower's credit history and creditworthiness but does not serve as a promise to repay a loan. A tax return reflects an individual's income and tax obligations but is not related to loan commitment. A loan application is primarily a request for credit and contains information about the borrower's financial situation but does not constitute a binding agreement to repay. Thus, the promissory note is the definitive document that establishes this commitment.