Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Floating charge wikipedia , lookup
Interest rate ceiling wikipedia , lookup
Securitization wikipedia , lookup
First Report on the Public Credit wikipedia , lookup
Annual percentage rate wikipedia , lookup
Credit rationing wikipedia , lookup
Credit bureau wikipedia , lookup
Introduction Credit Cards Plastico… Fantastico! Credit Cards Plastico… Fantastico! There are almost a billion MasterCard and Visa credit/debit cards in use in the US Credit Cards Plastico… Fantastico! There are almost a billion MasterCard and Visa credit/debit cards in use in the US In 2006, Visa cardholders made more than $1,000,000,000,000 in purchases Credit Cards Plastico… Fantastico! There are almost a billion MasterCard and Visa credit/debit cards in use in the US In 2006, Visa cardholders made more than $1,000,000,000,000 in purchases Today’s consumer owes money, on average, to 13 different lending institutions, including credit cards and loans Credit Cards Plastico… Fantastico! There are almost a billion MasterCard and Visa credit/debit cards in use in the US In 2006, Visa cardholders made more than $1,000,000,000,000 in purchases Today’s consumer owes money, on average, to 13 different lending institutions, including credit cards and loans There are over 1 billion Visa cards used internationally Credit Cards Plastico… Fantastico! There are almost a billion MasterCard and Visa credit/debit cards in use in the US In 2006, Visa cardholders made more than $1,000,000,000,000 in purchases Today’s consumer owes money, on average, to 13 different lending institutions, including credit cards and loans There are over 1 billion Visa cards used internationally More than half of the US population has at least 2 credit cards! Consumer Credit “Live within your income, even if you have to borrow money to do so.” – Josh Billings What do you think it means? Consumer Credit “Live within your income, even if you have to borrow money to do so.” – Josh Billings What do you think it means? Traditionally, living within your income means that if you need to borrow money to buy something, you can’t afford it. Living within your income does not mean not ever borrowing money. It means you should borrow what you can afford to repay. Definitions If you purchase something that you do not pay for immediately, you are using CREDIT. People who use credit are called DEBTORS. Organizations or people that extend credit to consumers are called CREDITORS. Definitions If you purchase something that you do not pay for immediately, you are using CREDIT. People who use credit are called DEBTORS. Organizations or people that extend credit to consumers are called CREDITORS. Creditors extend credit to consumers by checking your financial history. Among the items that they check is Assets, Earning Power and Credit Rating Definitions ASSETS – Assets are everything you own – your home, car, bank accounts, and other personal possessions. EARNING POWER – Earning power is your ability to earn money now and in the future. Creditors want to make sure you have enough income to repay the debt. CREDIT RATING – A credit rating is your credit “report card”. Every time you use credit, the creditor reports how well you met your financial obligations to a credit reporting agency. Definitions A CREDIT REPORTING AGENCY compiles records on all users of credit. Consumers are given credit scores based on these three criteria. The most popular is the FICO SCORE. FICO scores range from 300 to 850, with a higher score representing less risk for creditors. Definitions INSTALLMENT PLAN – Definitions INSTALLMENT PLAN – Some stores offer creditworthy customers the convenience of paying for merchandise or services over a period of time. Definitions INSTALLMENT PLAN – Some stores offer creditworthy customers the convenience of paying for merchandise or services over a period of time. DOWN PAYMENT – Definitions INSTALLMENT PLAN – Some stores offer creditworthy customers the convenience of paying for merchandise or services over a period of time. DOWN PAYMENT – Part of the selling price that a customer pays at the time of purchase. Definitions INSTALLMENT PLAN – Some stores offer creditworthy customers the convenience of paying for merchandise or services over a period of time. DOWN PAYMENT – Part of the selling price that a customer pays at the time of purchase. INTEREST/FINANCE CHARGE – Definitions INSTALLMENT PLAN – Some stores offer creditworthy customers the convenience of paying for merchandise or services over a period of time. DOWN PAYMENT – Part of the selling price that a customer pays at the time of purchase. INTEREST/FINANCE CHARGE – Scheduled payments are made on a monthly basis plus a fee, the fee is called interest/finance charge. Example 1 Your friend wants to purchase an electric guitar. The price of the guitar with tax is $2,240. If your friend can save $90 per month, how long will it take to save up for the guitar? Example 1 Your friend wants to purchase an electric guitar. The price of the guitar with tax is $2,240. If your friend can save $90 per month, how long will it take to save up for the guitar? $2240 $90 ≈ 24.9 = 25 𝑚𝑜𝑛𝑡ℎ𝑠 Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Sum of Monthly Payments – Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Sum of Monthly Payments – 24($88.75)=$2,130 Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Sum of Monthly Payments – 24($88.75)=$2,130 Total Cost - Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Sum of Monthly Payments – 24($88.75)=$2,130 Total Cost - $336+$2,130=$2,466 Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Sum of Monthly Payments – 24($88.75)=$2,130 Total Cost - $336+$2,130=$2,466 Finance Charge - Example 2 Suppose your friend from the previous example is offered the following financing: 15% down payment, with the remainder, plus finance charge, paid back on a monthly basis for the next 2 years. The monthly payment is $88.75. What is the finance charge? (Guitar price - $2,240) Down Payment - $2,240(0.15)=$336 Sum of Monthly Payments – 24($88.75)=$2,130 Total Cost - $336+$2,130=$2,466 Finance Charge - $2,466 - $2,240 = $226 Example 3 Carpet King is trying to increase sales, and it has instituted a new promotion. All purchases can be paid on the installment plan with no interest, as long as the total is paid in full within six months. There is a $20 minimum monthly payment required. If the Schuster family buys carpeting for $2,134 and makes the minimum payment for five months, how much will they have to pay in the sixth month? Example 3 Carpet King is trying to increase sales, and it has instituted a new promotion. All purchases can be paid on the installment plan with no interest, as long as the total is paid in full within six months. There is a $20 minimum monthly payment required. If the Schuster family buys carpeting for $2,134 and makes the minimum payment for five months, how much will they have to pay in the sixth month? Purchase Price – Amount Paid: $2,134 - $100 = $2,034 Assignment Monique buys a $4,700 air conditioning system using an installment plan that requires 15% down. How much is the down payment? Craig wants to purchase a boat that costs $1,420. He signs an installment agreement requiring 20% down payment. He currently has $250 saved. Does he have enough for the down payment? If not, how much is he short? Jean bought a $1,980 snow thrower on the installment plan. The installment agreement included a 10% down payment and 18 monthly payments of $116 each. (A) How much is the down payment? (B) What is the total amount of the monthly payments? (C) How much did Jean pay for the snow thrower on the installment plan? (D) What is the finance charge?