Chp. 7 borrowing Flashcards
borrowing
getting money from a financial insitution which is to be paid back with interest for an agreed time
why borrow?
college fees, to start a business, pay for unseen events
APR
annual percentage rate is a rate on loan and interest and its charged on whats left to be paid
factors to consider before borrowing money
do you need the item, could you save money , can you afford the repayments
sources of borrowing
commercial bank, credit union, building societies
loan
money borrowed from a financial intutuion
long-term loan
paid over more than 5 yrs
for things like a house
could have security such as collateral and guarantor
mid-term loan
paid back over 1 to 5 yrs
for things like a car, home improvements
collateral
something of value that the borrower promise to give to the lender if they don’t repay the loan
guarantor
person who will pay for loann if the borrower in unable to
borrowers rights
know total cost of the loan
that you can cancel your loan within 14 days ‘clling off’
know how many payments have to be made and amount
borrowers responsibilities
truthful when filing out application
use borrowed money for its purpose
pay loan off in full at the right time
short term borrowing
bank overdraft, credit card, money lenders
medium term borrowing
hire purchase, leasing
bank overdraft
permission to withdraw more money that is in your account
