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    Credit

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    This document discusses advantages and disadvantages of using credit as well as factors lenders consider when approving applications. It outlines that credit allows convenient purchases but can lead to higher costs and financial difficulties if not managed properly. Lenders evaluate an applicant's character, capacity to repay debts, and available capital through assets when deciding whether to extend credit. The "20-10 rule" recommends borrowing no more than 20% of annual net income and keeping monthly payments below 10% of monthly net income.

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    Credit

    Uploaded by

    api-196022019
    2K views4 pages
    This document discusses advantages and disadvantages of using credit as well as factors lenders consider when approving applications. It outlines that credit allows convenient purchases but can lead to higher costs and financial difficulties if not managed properly. Lenders evaluate an applicant's character, capacity to repay debts, and available capital through assets when deciding whether to extend credit. The "20-10 rule" recommends borrowing no more than 20% of annual net income and keeping monthly payments below 10% of monthly net income.

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    credit ppt

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    This document discusses advantages and disadvantages of using credit as well as factors lenders consider when approving applications. It outlines that credit allows convenient purchases but can lead to higher costs and financial difficulties if not managed properly. Lenders evaluate an applicant's character, capacity to repay debts, and available capital through assets when deciding whether to extend credit. The "20-10 rule" recommends borrowing no more than 20% of annual net income and keeping monthly payments below 10% of monthly net income.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    2K views4 pages

    Credit

    Uploaded by

    api-196022019
    This document discusses advantages and disadvantages of using credit as well as factors lenders consider when approving applications. It outlines that credit allows convenient purchases but can lead to higher costs and financial difficulties if not managed properly. Lenders evaluate an applicant's character, capacity to repay debts, and available capital through assets when deciding whether to extend credit. The "20-10 rule" recommends borrowing no more than 20% of annual net income and keeping monthly payments below 10% of monthly net income.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
    of 4

    Teens

    lesson seven
    credit

    presentation slides

    04/09
    advantages and disadvantages of credit

    advantages:
    • Able to buy needed items now
    • Don’t have to carry cash
    • Creates a record of purchases
    • More convenient than writing checks
    • Consolidates bills into one payment

    disadvantages:
    • Interest (higher cost of items)
    • May require additional fees
    • Financial difficulties may arise if one loses track of how much has been spent
    each month
    • Increased impulse buying may occur

    teens – lesson 7 - slide 7-A


    the three Cs

    Character—will you repay the debt?


    From your credit history, does it look like you possess the honesty
    and reliability to pay credit debts?

    Capital—what if you don’t repay the debt?


    Do you have any valuable assets such as real estate, savings, or
    investments that could be used to repay credit debts if income is
    unavailable?

    Capacity—can you repay the debt?


    Have you been working regularly in an occupation that is likely to
    provide enough income to support your credit use?

    teens – lesson 7 - slide 7-B


    how much can you afford? (the 20-10 rule)

    never borrow more than 20% of your yearly net


    income
    • If you earn $400 a month after taxes, then your net income in
    one year is:
    12 x $400 = $4,800

    monthly payments shouldn't exceed 10% of your


    monthly net income
    • If your take-home pay is $400 a month:
    $400 x 10% = $40

    teens – lesson 7 - slide 7-I

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