Borrowing (Junior Cert Business Studies): Flashcards
📚Flashcards
Practise the cards
12 cards from this deck
ShowHide
Practise the cards
12 cards from this deck
Definition of borrowing
Definition of borrowing
Obtaining money from a financial institution to repay with interest by an agreed future date
Alternative term for borrowing
Alternative term for borrowing
Buying on credit
Why borrowing has a cost
Why borrowing has a cost
Borrowers must pay interest on the amount owed
Reason to borrow: major purchases
Reason to borrow: major purchases
To buy expensive items like houses or cars
Reason to borrow: emergencies
Reason to borrow: emergencies
To cover unexpected costs like medical bills
Loan term matching principle
Loan term matching principle
Match borrowing period to the purpose of the loan
How to assess affordability
How to assess affordability
Check if monthly leftover income covers the repayment
Sources of borrowing (name some)
Sources of borrowing (name some)
Banks, credit unions, building societies, lenders
What is collateral?
What is collateral?
Asset securing loan; lender can take if unpaid
What is a guarantor?
What is a guarantor?
Someone who repays your loan if you cannot
What does APR mean?
What does APR mean?
Annual Percentage Rate - yearly cost of borrowing
What are arrears?
What are arrears?
Being behind on loan repayments