Unit 6

 Business Forms:  Installment loan contracts  Mortgage loan contracts  Promissory notes  Short-term notes can be paid in 30, 60 or 90 days.

 Long-term notes are usually repaid in monthly installments over a period of years.  Be sure you repay your loans on time. Your reputation for being dependable will be an asset to you as you carry out the duties of managing a business within the model community.

6.1

Hollywood and Vine Videos maintains 10 inventory cards on selected videos.  Businesses that use promissory notes:  Buckeye Equipment  The Clothes Closet  Creative Advertising Agency  The Denim Maker  Hollywood & Vine Videos  Pettisville Bank  Popular Designs

Note: Principal spelled P-r-i-n-c-i-p-a-l means  An amount borrowed  Governing officer of a school  Main or chief

Principle spelled P-r-i-c-i-p-l-e means  Basic source; fundamental truth Be careful when you complete a loan application that you answer all questions fully. Omitting requested information or deliberately misleading the lender is just as serious as lying. Many loans are denied because the borrower did not fully disclose all of the requested information.

 January 31  February 28  March 31  April 30  May 31  June 30  July 31  August 31  September 30  October 31  November 30  December 31

What are the three C’s of credit?  Character  Capacity  Capital Security means a pledge that a loan will be repaid.

 If there is doubt about a company’s ability to repay a loan, a bank may require a business to pledge its accounts receivable or inventory as security for the loan. If the loan is not repaid, the bank can claim the inventory or accounts receivable.

 Credit bureaus keep records of consumer debts. Late payments and overdue bills prevent consumers from obtaining the loans they seek.  Sometimes suppliers insist that a customer sign a promissory note as a condition for obtaining credit.

Some suppliers hesitate to allow customers to buy on credit because of  Poor credit rating  No credit history  Record of slow payments

6.2

Businesses that use mortgage loans  18 Wheeler Truck Lines  Creative Advertising  Hollywood & Vine Videos  Noveau Investment Company  Pettisville Bank  Popular Designs  Taylor Office Designs  United Communications

 Real estates typically appreciates while other assets, such as automobiles depreciate.  Mortgage holders may deduct interest payments on their income tax returns.  Mortgage loans are eventually repaid while rent payments are perpetual.

Unit 6 would be essential for success in the following careers:  Audit clerk  Credit Manager  Loan Officer  Mortgage Clerk  Real Estate Clerk  Real Estate Attorney

Businesses that use installment loans:  18 Wheeler Truck Lines  Nouveau Investment Co.  Pettisville Bank

 When you obtain an installment loan, a down payment is usually required.  A right of repossession states a lender may take back the merchandise if the loan payments are not made as agreed.  Lenders often encourage borrowers to purchase credit life insurance. This pays off a loan in the death of the insured.

Example:  A husband may purchase a credit life policy for $20,000 on his new automobile so that his wife would not have to pay off the loan in the case of his death. If he purchased a term life insurance policy for $20,000 instead, the cost would be far less.