unit 7: borrowing moneynwtech.edu/alvacc/wp-content/uploads/2019/10/unit-7-frascht.pdf · • list...
TRANSCRIPT
![Page 1: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/1.jpg)
Unit7:BorrowingMoney
PersonalFinancialLiteracy
![Page 2: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/2.jpg)
Objectives
• Identifywaystoestablishagoodcreditrecord.
• Discusstheimportanceofreviewingcreditreports.
• Determinehowandwheretogetaccuratecreditscores.
• Formulateoptionsforfinancingavehicle.• Discussfactorsthatinfluencethevehicleyouleaseorpurchase.
![Page 3: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/3.jpg)
Objectives-Continued
• Listtheadvantagesanddisadvantagesofleasinganautomobile.
![Page 4: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/4.jpg)
Credit
• Supplyofmoney,goods,orservicesinpresenttimeinexchangeforpromiseoffuturepayment
• Goodwaytoobtainthingsyouwantandneed• Canleadtofinancialproblems
![Page 5: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/5.jpg)
What’sonaLoanApplication?
• Asksfor:– placeofemployment– lengthofemployment– howmuchyouearn– assets– howlongyouhavelivedatyourresidence– whatyouarepayingforhousing– financialaccountsandcreditreferences
![Page 6: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/6.jpg)
CreditRecord
• Borrowingandrepaymenthistory• Howmuchyouowecreditors• Historyoflatepayments• Canstartasearlyasage16• Onrecordupto7years(longer,ifyou’vedeclaredbankruptcy)
• Sourcesofincome
![Page 7: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/7.jpg)
CreditRecord
• Typeofhouseyoulivein• Anylegaljudgments• AreNOTallowedtoreveal:– Gender– Religion– Race– Age– Countryoforigin
![Page 8: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/8.jpg)
HowtoEstablishCredit
• Payutilitybillsontime• Havesavingsandcheckingaccount
• Makedepositsanddon’tbeoverdrawn
• Applyforcreditcard• Makecreditcardpurchasesandpaythemoff
![Page 9: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/9.jpg)
ManagingCreditRecord
• Paybillsbeforetheyaredue• Makemorethanminimumpayment• Keepbalanceslow• Don’toveruseorapplyfortoomanycreditcards
• Makeregulardepositstosavingsaccounts
![Page 10: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/10.jpg)
CreditReports
• FICO,Equifax,Experian,TransUnion• Reviewannually• Freereportfromeachcreditbureaueachyear–doesnotincludeacreditscorethough
![Page 11: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/11.jpg)
TheFourCs• Character–Yourreputationasaborrower.Howresponsible
haveyoubeen?Haveyouhadlatepaymentsordelinquentaccounts?
• Capacity–Aborrower’sabilitytopaybackhis/herloan.Maycomparedebttoincomeanddebtthatyoutakeonandpayoffregularly.
• Capital–Whatyouownsuchasmachineryandequipmentorcash.
• Collateral–Assetsthatalendercantakepossessionofifaborrowerdefaultsonhis/herloan.
![Page 12: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/12.jpg)
FICO• TypeofcreditscorecreatedbyFairIsaacCorporation
• Basedon:– Credithistory(35%ofscore)– Currentlevelofdebt(30%)– Lengthoftimeusingcredit(15%)– Applyingfornewcredit(10%)– Typeofcreditused(10%)
![Page 13: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/13.jpg)
FICO• Scoresrangefrom300to850• Determineswhetheryouqualifyforloanandtheinterestrate
![Page 14: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/14.jpg)
WheretoBorrow
• Consumerfinancecompanies
• Financialinstitutions• Insurancecompanies• Loansharks • Pawnbrokers • Paydayloans • Privateloans
![Page 15: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/15.jpg)
VehicleLoans
Consider:• Interestrate• Monthlypayments• Lengthoftheloan• Downpaymentortrade-in• Balloonpaymentclauseoraccelerationclause
![Page 16: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/16.jpg)
ResearchingCarPurchase
• ConsumerReports• CarandDriver• www.edmunds.com• www.kbb.com• Carfax
![Page 17: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/17.jpg)
Depreciation
• Newcarloses20%ofitsvalueimmediately.• Mostofacar’sdepreciationoccursinthefirsttwoyears.
![Page 18: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/18.jpg)
LeasingAdvantages
• Lowermonthlypayments• Candriveamoreexpensivecar• Driveanewcarevery2to3years(tendstobemorereliable)
![Page 19: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/19.jpg)
LeasingDisadvantages
• Mileagelimit• Moreexpensive• Finesfordingsordents• Neveractuallyownthecar
![Page 20: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/20.jpg)
UnitReview1. Discusswhatcreditis,itsbenefits,and
potentialproblems.2. Howdoesapersonbeginestablishinga
creditrecord?3. Describewhatcanbedonetoestablisha
goodcreditrecord.4. Namethethreemajorcreditbureaus.
![Page 21: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/21.jpg)
UnitReview-Continued5. Whyisitimportanttoreviewcopiesofyour
creditrecord,andisthereanythingthatcanbedoneifacreditreporthaserroneousinformation?
6. Describetherelationshipofcreditbureauswithlendersandcreditors.
7. DescribethefourC’sofcredit.
![Page 22: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/22.jpg)
UnitReview-Continued8. Whatisthemostcommonlyusedcredit
score,andhowisitcompiled?9. ExplaintherelationshipofFICOscoresand
interestrates.10. Describeatypicalvehicleloan.11. Compareandcontrastthevarioussourcesof
loans.
![Page 23: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/23.jpg)
UnitReview-Continued12. Discussthefactorsthatshouldbeconsidered
whenshoppingforavehicleloan.13. Wherecanyoufindimpartialinformation
aboutmakesandmodelsofvehicles?14. Discussinformationthatcanberesearched
whenshoppingforacar.15. Howarenewvehiclesaffectedby
depreciation?
![Page 24: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/24.jpg)
UnitReview-Continued16. Howdousedvehiclesaffectdepreciation
andwhatareotherconsiderationswhenpurchasingausedvehicle?
17. Discusstheadvantagesanddisadvantagesofleasingavehicle.
![Page 25: Unit 7: Borrowing Moneynwtech.edu/alvacc/wp-content/uploads/2019/10/Unit-7-Frascht.pdf · • List the advantages and disadvantages of leasing an automobile. Credit • Supply of](https://reader033.vdocuments.us/reader033/viewer/2022050120/5f50a4954060c27b560b3402/html5/thumbnails/25.jpg)