A4 - managing personal finance

Question 1

definition - overdraft

Answer 1

a type of debt that allows you to spend more money than you have up to a certain amount

Question 2

definition - personal loan

Answer 2

unseccured credit provided by financial institutions based on criteria like employment history and credit history

Question 3

definition - hire purchase

Answer 3

a system by which one pays for a thing in regular instalments while they have the use of it

Question 4

definition - mortgage

Answer 4

a legal agreement in which a bank lends a large sum of money for a long period of time (25 years)

Question 5

definition - credit cards

Answer 5

payment card issued by banks to allow its users to pay for goods and services - must be paid back with interest

Question 6

definition - payday loans

Answer 6

small amount of money lent at a high rate of interest in agreement that the loan will be paid out of the next pay day wages