Sources Of Finance Flashcards
What form of finance involves getting the product immediately, then paying for it in monthly instalments?
Hire Purchase .. Often used to buy things like sofas and cars.
What is the price of borrowing money?
Interest
a facility from the bank that allows you to go into credit (negative balance) without any hassle.
An overdraft
A form of finance that need never be paid back, but involves offering part ownership/control of the business.
Share issue
Renting a new product for a period of months / years without actually owning the product.
Leasing
A form of finance which allows the giver rights to dividends (payments from the profits)
Share issue.
But note - dividends don’t have to be paid.
A way to get goods from suppliers without paying for them immediately.
Trade Credit
Money from a bank to buy property - spelt correctly please.
Mortgage
Institutions that offer loans - but not banks
Building Societies.
Originally, building societies only offered mortgages.
This form of finance will include a maintenance agreement - probably because it is expensive and likely to have mechanical problems.
Lease
You pay to use some asset without ever owning it.
Renting or hiring.
A very flexible and convenient form of credit which can be very small, and for a short period of time - e.g. a few pounds for a few days.
Overdraft
A form of finance which charges high rates of interest, so not sensible for a long period of time or for large sums of money.
Overdrafts
