Chapter 8:borrowing For Households And Indivduals

Question 1

What is borrowing

Answer 1

Borrowing means getting money from a person or financial institution and agreeing to pay it back at a later date. The borrower will usually have to pay an extra amount to the lender for the use of their money. This extra charge is called interest.

Question 2

Name types of finance for borrowing

Answer 2

Short term- bank over draft
Medium term- medium term loan
Long term-long term loan

Question 3

What’s a long term loan

Answer 3

Households and individuals generally use a special long-term loan called a mortgage for buying property.

Question 4

What are medium term loans?

Answer 4

Loans for medium term purposes, such as car purchase or the purchase of household goods, are repaid over a maximum of three years.

Question 5

List the services and products that are provided by financial institutions

Answer 5

Mortgages

Loans to purchase a home where the collateral is the home itself (more than 25 years-long term loan)

Question 6

What is intrest

Answer 6

Intrest is the financial cost if borrowing money