1. Credit and Borrowing
Vault Lesson 4

2. Credit
Credit
A loan that a person uses to pay for things, but is expected to pay back

3. Interest
Interest
Amount of money the borrower pays for the use of a lender’s money

4. Lending Items to Friends
You should only lend things to friends who always return things on time and in good condition Don’t lend things to friends who are really funny but always return things late or who return things on time, but have been known to break your things.

5. Lending and Borrowing Items
Before lending an item to a friend you should tell your friend when you expect them to return the item. If you damage something you’ve borrowed from a friend to regain your friend’s trust you should buy your friend a replacement item.

6. Paying with Credit vs. Cash
You borrow money to make a purchase and repay the money borrowed later
Is a form of borrowing
is like taking out a loan that has to be repaid.
Paying with cash
You spend only the cash you have in your hand or in your checking account
keeps you from spending more money than you have.

7. Using Credit to Pay for Items
Credit is sometimes used to pay for items such as
A car
A house
A dishwasher

8. Borrowing Money from a Bank
Why do banks lend people money?
Banks make money from the interest the borrower pays to use the money
EXAMPLE
If you borrow $1, from a bank and the interest was 10% you would have to repay the bank $1,
The additional $ is the fee (interest) the bank charges you to use the money you borrowed.

9. Borrowing Money from a Bank
When you borrow money it is important that you pay it back on time. If you do not repay your loan on time you will have a hard time getting another loan from the bank.

10.
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Complete Lesson 4: Credit and Borrowing
You might want to review this PowerPoint before you take the 10 question post assessment for this lesson.