What is discretionary lending?

Discretionary lending refers to a type of loan or credit extension where the lender has the flexibility to decide the terms, amount, and conditions based on their assessment of the borrower's financial situation and creditworthiness. This approach allows lenders to use their judgment rather than strictly adhering to predetermined criteria or guidelines. It often applies in situations where standard lending policies may not fully capture the nuances of a borrower's circumstances, enabling more tailored financial solutions.