Economics: Year 10 - Methods of Borrowing

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  • Created by: WBAudis
  • Created on: 03-12-15 12:09
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  • Methods of Borrowing
    • Mortgage
      • A loan to finance the purchase of real estate (e.g. a house).
      • A mortgage is secured on the house, which remains the property of the bank until it is fully paid off.
    • Credit Card
      • Cards that may be used repeatedly to buy products and services on credit to borrow money up to a prearranged limit.
      • Each month, you must pay at least the minimum payment required (usually around 3-5 per cent) of the outstanding balance.
      • You can pay more if you want, and this will reduce the interest you pay. Credit card interest rates are high.
        • Each month, you must pay at least the minimum payment required (usually around 3-5 per cent) of the outstanding balance.
    • Store Card
      • Cards that may be used to buy products and services on credit from the shop that issued the card, up to a prearranged limit.
      • Credit Card
        • Cards that may be used repeatedly to buy products and services on credit to borrow money up to a prearranged limit.
        • You can pay more if you want, and this will reduce the interest you pay. Credit card interest rates are high.
        • Repayment terms are similar to credit cards.
      • Personal Loan
        • A loan given for personal or household use (e.g. to buy expensive household items like new furniture).
      • Hire Purcahse
        • Instalment plan whereby the loan company owns the item, but it becomes yours when the agreement (debt) is fully paid off.
      • Overdraft
        • Borrowing up to an agreed limit on a current account. Overdrafts must be paid back on demand.

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