Chapter 5 summary Flashcards
1
Q
___ is the use of credit by individuals and families for personal needs.
A
consumer credit
2
Q
What are the advantages of using credit?
A
- ability to purchase goods when needed and pay for them gradually
- ability to meed financial emergencies
- convenience in shipping
- establishment of a credit rating.
3
Q
What are the disadvantages of credit?
A
- costs money
- encourages over spending
- ties up future income
4
Q
___ and ___ are two types of consumer credit.
A
closed end/ open end
5
Q
What is closed end credit?
A
the borrower pays back a one time loan in a stated period of time and with a specified number of payments
6
Q
What is open end credit?
A
borrower is permitted to take loans on a continuous basis and is billed for partial payments periodically
7
Q
What are the major sources of a consumer credit?
A
- commercial banks
- savings and loan associations
- credit unions
- finance companies
- life insurance companies
- family and friends
