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Individual Money Lenders

The document discusses credit, which is a legal agreement to receive goods or services now and pay for them later. Credit can be obtained from various sources like individuals, retail stores, banks, credit unions, and more. It describes different types of credit like credit cards, installment loans, revolving credit, and student loans. The risks of using credit include interest, overspending, debt, and identity theft. Maintaining good credit requires paying balances on time, keeping credit utilization low, and checking credit reports regularly.

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Ma. Kristine Laurice Amancio
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© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
74 views

Individual Money Lenders

The document discusses credit, which is a legal agreement to receive goods or services now and pay for them later. Credit can be obtained from various sources like individuals, retail stores, banks, credit unions, and more. It describes different types of credit like credit cards, installment loans, revolving credit, and student loans. The risks of using credit include interest, overspending, debt, and identity theft. Maintaining good credit requires paying balances on time, keeping credit utilization low, and checking credit reports regularly.

Uploaded by

Ma. Kristine Laurice Amancio
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Credit

 A legal agreement to receive cash, goods, or services now and pay for them in the future.

WHY USE CREDIT?

 Avoid paying cash for large outlays

 Meet financial emergency

 Convenience

 Investment Purposes

SOURCE OF CREDIT

 Individual Money Lenders

◦ Lend his surplus to those in need so that it will bring income to him

 Retail Stores

 Pawnshops

 Commercial Banks

◦ Engage in the grant of loans not only to businessmen, but also to individuals for
personal purposes

 Savings Bank

◦ Financial institution whose primary purpose is accepting savings deposits and paying
interest on those deposits

 Rural Bank

◦ Financial institutions that help rationalize the developing regions or country to finance
their needs specially the projects regarding agricultural progress

 Development banks

◦ Financial institutions dedicated to fund new and upcoming businesses and economic
development projects by providing equity capital or loan.

 Investment Bank

◦ Financial institutions that provide large amounts of long-term fixed capital, primarily
established firms. It generally takes an equity stake in the borrower firm to exercise
some influence on its direction and operations

 Savings and Loan Associations

◦ Associations that accept savings at interest and lend money to savers chiefly for home
mortgage loans and may other related services.
 Finance Companies

◦ Installment Sales Finance Companies

◦ Consumer Finance Companies

◦ Commercial Finance Companies

 Credit Unions

◦ Corporate organizations which lend savings of members to some of the members of the
group

 Insurance Companies

◦ Issues insurance contracts with those who wish to provide for such contingencies like
death or fire. They receive premiums and pay out money on the occurrence of the
particular contingencies

 Other Sources

◦ Social Security System

◦ Government Service Insurance System

◦ PAG – IBIG

◦ Other Government Agencies

CREDIT POLICIES

 May vary from one business to another

 Credit Terms

◦ Terms and conditions which credit is granted.

 Credit Periods

◦ Amount of time within which the customer is expected to remit payment in part or in
full

 Credit Limit

A limit with respect to the amount or value that a customer can obtain from the source

How to establish credit

 Bank accounts

 Employment history

 Residence history

 Utilities in borrower’s name


 Department store or gas credit card

How to maintain a good credit rating

 Establish a good credit history.

 Pay monthly balance on time.

 Use credit cards sparingly and stay within the limit.

 Do not move balance to other cards.

 Check credit report regularly.

Types of Credit

 Credit Cards

Plastic cards with electronic information that can be used by the holder to make purchases or
obtain cash advances using a line of credit made available by the card-issuing financial
institution.

 Installment Loans

A loan in which the amount of payment and the number of payments are predetermined, such
as an automobile loan.

 Fixed payment

 Set period of time

 Set or varying interest rates

 Examples: Car loans and mortgages

 Service Credit

A member's earned service, prior service, and purchased service.

 Revolving Credit

 A type of credit that does NOT have a fixed number of payments, such as a credit card.

 No stated payoff time

 Limit to credit

 Minimum monthly payments

 Finance charges

 Example: credit card


 Student Loans

Loans offered to students to assist in payment of the costs of professional education. These
loans usually charger lower interest than other loans, and are also usually issued by the
government.

Allows a person to finance their education and defer payments until after graduation.

 Debit cards are plastic cards with electronic information, that look very similar to credit cards,
that you can use to take money out against your checking account.

When you swipe your debit card remember that the money is taken immediately from your
checking account.

 IOU

 Single Payment Credit

Risks of Credit

 Interest

 Overspending

 Debt

 Identity Theft

Responsibilities of Credit

 Know the real cost of debt.

 Don’t use credit to live beyond your means.

 It is all about the details…read the fine print!

 Pay as much as you can, as early as you can.

Warning Signs of Credit Abuse

 Delinquent Payments

 Default Notices

 Repossession

 Collection Agencies

 Judgment Lien

 Garnishment

Financial Consequences of Debt

 Overspending
 Paying high interest rates

 Lowers credit score

 Difficulty getting a loan

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