Unit 2 Topic 10 #valleyifs @ Kahoot Borrowing products Unit 2 Topic 10 #valleyifs @ Kahoot

Borrowing products No. Question A B C Ans 1 Which of the following is an example of a good debt? Borrowing for a car Borrowing for a house Borrowing for a holiday 2 Credit union loans are a very good alternative to payday loans but they can also be of benefit to people with a good credit record or longer-term borrowing needs. True False 3 It is unusual for people who have no debts and pay off their credit cards in full to be rejected by lenders for this reason. 4 A mortgage usually has: Variable interest rate Tracker interest rate Fixed interest rate 5 In the early years of a mortgage, the repayments pay off: Mainly capital Mainly interest Both capital and interest 6 Define bad debt and give three examples of it [4] 7 Give two FCA rules regarding unfair payday lending [2] 8 What is unsecure lending? [2]

Answers No. Question A B C 1 Which of the following is an example of a good debt? Borrowing for a car Borrowing for a house Borrowing for a holiday 2 Credit union loans are a very good alternative to payday loans but they can also be of benefit to people with a good credit record or longer-term borrowing needs. True False 3 It is unusual for people who have no debts and pay off their credit cards in full to be rejected by lenders for this reason. 4 A mortgage usually has: Variable interest rate Tracker interest rate Fixed interest rate 5 In the early years of a mortgage, the repayments pay off: Mainly capital Mainly interest Both capital and interest 6 Define bad debt and give three examples of it [4] Marks awarded for definition and three correct examples (valid alternatives accepted) Bad debts are used to buy things that have no real value, lose value quickly, produce no income or don’t really improve the borrower’s situation. [1] borrowing for a holiday [1] borrowing to buy clothes [1] high-interest borrowing, such as payday loans [1] 7 Give two FCA rules regarding unfair payday lending [2] Marks awarded for any two rules from the list below A payday lender can charge a borrower a maximum of 0.8% a day A payday lender can charge a borrower a maximum of 100% of the amount borrowed in interest and charges. A payday lender can charge a maximum of £15 if the borrower doesn’t repay the loan on time. Payday loans can only be rolled over twice. 8 What is unsecure lending? [2] Marks awarded for correct developed definition Lending where the lender doesn’t have rights over anything [1] and could be at risk of losing money if the borrower doesn’t pay [1] Answers

Task Go to the IFS website and take a look at the topic test for topic 10 to further revision the main points. Make revision materials. 10 minutes

Key Terms for Topic 10 CLICK FOR TIMER Capital Credit Rating Endowment Policy Equity Profit Margin Revolving Credit On your whiteboards or books, write down a definitions for these key terms. EXT: Can you give examples of each? 5 minutes CLICK FOR TIMER

Answers Endowment policy – an insurance product that pays out a lump sum after a specified term or if the insured person dies before the end of the term. Endowment policies are often used as a way of saving over the long term. Profit margin – the difference between the money received by providing a service and the cost of providing the service. Capital – the money or other assets owned by an individual or a business. In the case of a financial service provider (ie bank or lender), it refers to the funds provided by the shareholders, not deposits from customers. Credit rating – an assessment of the risk that the borrower poses for the lender. Revolving credit – a loan where the borrower can borrow up to a set limit. Each time they pay back some of the loan, they can borrow it back later. Equity – the difference between the value of a property and the mortgage on it.

GCSE IFS Finance – Unit 2 Topic 10 Search for #valleyifs GCSE IFS Finance – Unit 2 Topic 10