Business Chapter 12&15 Review

What is credit?

• taking your savings and using it to buy emergency items

• privilege of using someone else's money to purchase an item or service now and then pay for it later

A CREDITOR is

• the person/business that sells on credit or grants a loan

• is the person or business that buys on credit or obtains a loan

• penalty or fee for borrowing or the reward for loaning

• refers to the amount borrowed or owed

A debtor

• refers to the amount borrowed or owed

• is the penalty or fee for borrowing or the reward for loaning

• is the person or business that buys on credit or obtains a loan

• is the person or business that sells on credit or grants a loan.

Interest is the

• person or business that sells on credit or grants a loan.

• penalty or fee for borrowing or the reward for loaning

• person or business that sells on credit or grants a loan.

Principal refers to the

• • penalty or fee for borrowing or the reward for loaning

• amount borrowed or owed

Advantages of Business Credit are they

• use of corporate credit cards, overcome cash-flow shortages

• finance major purchases, consolidate payments, not giving away shares/equity

The Disadvantages of Business Credit are

• they finance major purchases, consolidate payments, not giving away shares/equity

• the use of corporate credit cards, overcome cash-flow shortages

Advantages of Consumer Credit include:

• faster transactions, less paperwork, live beyond your means.

• instant enjoyment, convenience, emergencies, consolidate bills, establishes credit rating, Rewards (Air miles, etc.)

Disadvantages of Consumer Credit include:

• credit costs (lower interest charges, decreases impulse buying, you buy too little)

• credit costs (higher interest charges), increases impulse buying, you buy too much, financial difficulties

Credit cards, installment sales credits, loans, mortgages, and lines of credit are COMMON TYPES & SOURCES of:

• banks

• debit

• credit

• monkeys