DEFINITION - Getting money from a lender that must be paid back in the future.
WHY DO PEOPLE BORROW? - People borrow money to make large purchases (i.e a house),and over time they will pay the money back that they have borrowed, with some interest on top. If there are not enough savings, then people chose to borrow to equate for their needs.
TYPES OF BORROWING - There are many different types of borrowing option available. Some of these include...
mortgage: a loan from a bank in order to purchase a real estate. The property is a security,so remainsin the banks 'pocket' until all the loanha been paid off.
credit card: cards that may be used repeatedly to buy products. They have a medium amounht of interest (normally around 3-5%) that must be paid back monthly.
store card: card used to buy products and services from a particular shop, where the interest rates are similar to thoseon credit cards.
personal loan: a loan given for a personal or hosuehold use (e.g.to buy new furniture)
hire purchase: instalment plan whereby the laon company owns the item, but it becomes yours when you pay off the loan.
overdraft: borrowing money up to an agreed limit on a current account. These must be paid back on demand.