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Credit and Borrowing. Vault Lesson 4. Credit. Credit A loan that a person uses to pay for things, but is expected to pay back. Interest. Interest Amount of money the borrower pays for the use of a lender’s money. Lending Items to Friends.
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Credit and Borrowing Vault Lesson 4
Credit Credit • A loan that a person uses to pay for things, but is expected to pay back
Interest Interest • Amount of money the borrower pays for the use of a lender’s money
Lending Items to Friends You should only lend things to friends who always return things on time and in good condition Don’t lend things to friends who are really funny but always return things late or who return things on time, but have been known to break your things.
Lending and Borrowing Items Before lending an item to a friend you should tell your friend when you expect them to return the item. If you damage something you’ve borrowed from a friend to regain your friend’s trust you should buy your friend a replacement item.
Paying with Credit vs. Cash Paying with credit • You borrow money to make a purchase and repay the money borrowed later • Is a form of borrowing • is like taking out a loan that has to be repaid. Paying with cash • You spend only the cash you have in your hand or in your checking account • keeps you from spending more money than you have.
Using Credit to Pay for Items Credit is sometimes used to pay for items such as • A car • A house • A dishwasher
Borrowing Money from a Bank Why do banks lend people money? • Banks make money from the interest the borrower pays to use the money • EXAMPLE • If you borrow $1,000.00 from a bank and the interest was 10% you would have to repay the bank $1,100.00. • The additional $100.00 is the fee (interest) the bank charges you to use the money you borrowed.
Borrowing Money from a Bank When you borrow money it is important that you pay it back on time. If you do not repay your loan on time you will have a hard time getting another loan from the bank.
http://vault.everfi.net • Use the link above to go to the Vault web site. • Log in • Complete Lesson 4: Credit and Borrowing • You might want to review this PowerPoint before you take the 10 question post assessment for this lesson.
