Financial Services _Çô Client Services RFC121 Chapter Notes - Chapter 5: Mortgage Loan, Revolving Credit, Down Payment
26 Oct 2016
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Credit: an arrangement to receive cash, goods, or services now and pay for them in the future: paying later for goods or services obtained now. Consumer credit: refers to the use of credit for personal needs (except a home or mortgage) Advantages: can be used now, paid later. Car, home, education, emergencies: convenience, you do(cid:374)"t ha(cid:448)e to (cid:272)arry (cid:272)ash, rewards, flexibility in money management, safety. Disadvantages: temptations to overspend, failure to pay back the loan. Types of credit: consumer loans (installment loans): one-time loans that the borrower pays back in a specified period of time with a pre-determined payment schedule. A written agreement, contract, list of repayment terms for credit purchases. Down payment or trade-in may be required. Can be interest only for a set period of time: revolving credit: a line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment.
