Taneisha Johnson Section 3 Chapter 23

Types of credit Credit refers to the receipt of money,goods,or service in exchange for a promise to pay People may get credit in form of loans. This form is called loan credit. Sales credit is also available. With this type of credit,comsumers can delay their payments for goods and service.

What is a loan credit? Loan credit involves money borrowed in order to buy something . Most of these loans are for major expenses. A borrower may not have cash on hand to pay for house,car,or college education. Buyers generally pay back loan credit in equal installments' the case of an auto loan, for example, you might pay installments of 180 $ per month for 48 months.

What is a sales credit When using loan credit, you borrow money. Sales credit , however ,allows you to purchase goods and service directly and delay paying until later. Don Marshall has charge account at Polk's department store. only one day, he decides to charge two sweaters there. After telling the clerk he is making a charge purchase, Don presents his charge card. he signs a receipt and takes home his purchase. The bill arrives a few weeks later. The revolving charge is probably is probably the most common form of consumer sales credit. Most revolving charge accounts are credit card accounts offered by chain stores, oil companies, and banks

The cost of credit The cost of credit varies from lender to lender.fortunaletly,the law requires lenders to tell you in writing before you sign an agreement how much charges will be. To understand the agreement, you will need to know the terms finance change, and annual percentage rate Finance change- is a total dollar amount you pay for credit. Annual percentage rate(APR)-Is the percentage cost of credit on yearly basis.

Check point question section 3 1.) Name and briefly explain the two basic types of credit. 2.) what are the three main types of sales credit? 3.)what does finance charge include? 4.)what is the pratical purpose of the APR? 5.) Lets say you bought a brand new car,paying &2,000 down and $178.60 a month for three years.what was the total cost of the car?