Subjects
Subscribe
Search Skwirk
Year 9 NSW
»
Commerce
»
Personal finance
»
Borrowing
Topic : Borrowing
In this topic you will learn...
Chapter 1 :
What is borrowing?
Borrowing is the temporary acquisition of money with the intent to repay the amount
A borrower assumes a debt to the lender
A loan is a contract between a borrowing party and a lending party
The principal is the initial amount borrowed from the lending party
Interest is an amount charged by the lending party, in addition to the principal
Your ability to repay the loan will affect how much you can borrow
A guarantor is a person enlisted to guarantee that the borrower repays the loan
A credit rating is a record of your borrowing and repayment history
Installments are regular amounts paid by the borrower to the lender, repaying part of the interest and principal
Borrowing money gives instant gratification to the borrower, allowing them to purchase something they cannot afford
Chapter 2 :
Types and suppliers of loans
The type of loan you should apply for depends on your reason for borrowing
Smaller loans attract higher interest rates
Large loans have lower interest rates but longer repayment periods
Housing loans are for the purchase of a property
A mortgage is a type of debt where the property becomes security for the loan
An asset is an item of economic benefit
Capital is money required to start a business
Personal loans are borrowing contracts for individual purposes
Secured personal loans are those that involve an item to guarantee the loan
An overdraft is a form of borrowing where the borrowing party withdraws more money than available in their account
Chapter 3 :
Factors considered by a lender
Lenders consider the risk involved with lending money to a particular borrower
Approval of a loan depends on the lender`s willingness to take a risk
Lenders may have guidelines that identify risky borrowers
The greater the risk for a lender, the higher the interest rate on a loan
Lenders may have a limit on the amount you can borrow from them
A lender will consider the stakes in a loan, including the size and type of loan
A lender`s potential gain will affect their view of a loan
A lender is more likely to lend money if a valuable item is used as security for the loan
Your financial position is a major factor in a lender`s decision to approve a loan
Lenders prefer if you have a stable job with a reliable, preferably high, income
Topic Summary
Audio Summary
Play
|
Download
Text Summary
This topic includes
8 colour images
1 flash animations
1 final exam
ToolBox
Increase text size
Print this page
EMPTY?