Presentation on theme: "Section 5-1 Monthly Payments. What do you know about Credit? Credit is whenever goods, cash, or services are provided in the promise to pay at a future."— Presentation transcript:
What do you know about Credit? Credit is whenever goods, cash, or services are provided in the promise to pay at a future date. Typical forms of credit: Credit Cards, Car loans, and mortgages.
How do people make money from credit? Finance Charge: An amount paid for using borrowed money. That is called interest Deferred Payment Price: Total amount the borrower must repay. (Principal + Interest)
What is credit good for? 1. Stabilizes the economy: Allows businesses to buy goods that they need but don’t have the money currently. 2. Promotes business growth 3. Credit expands productivity and production: College Loans promotes better education and higher pay. Businesses need money to get started before they can sell their product.
What is credit good for? Raises standard of living: Allows people to buy homes and cars without having to save up for the entire amount.
Parts of an Installment Loan 1. Down Payment: An amount required before the bank will give you a loan. 2. Substantial Finance Charge so the company can make money 3. Usually payments of equal amount spread out through the term of the loan. 4. Security agreement to the lender to make sure the payments are sent on time.