PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337117005
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 6, Problem 1LO
Summary Introduction
To determine: The reason behind the usage of consumer credit and lay down the benefits and problems associated with it.
Expert Solution & Answer
Explanation of Solution
The major reasons for which the consumer credit is used by the individuals are as follows:
- In order to make the purchases of expensive items without investing the huge amount at the single point of time.
- In order to meet the requirements at the time of emergency such as meting living expenses in the time of job loss or for paying the visit in the time of emergency.
- To pay the bills of various outlets or to pay the fees of various services from the place of convenience.
- Investments policies are purchased by using the funds from the consumer credit by many individuals.
Benefits of using the consumer credit are as follows:
- Helps to purchase the expensive items like car, furniture without disturbing the cash budget of the individuals.
- Easy availability of funds at the time of emergency.
Problems associated with the usage of consumer credit are as follows:
- Higher interest rates to be paid by the borrower on the borrowed amounts.
- Overspending the credit amount will become a debt trap which may lead into bankruptcy, poor credit ratings or the lawsuits.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Identify and explain the various warning signs associated with development of problem loan ?
What costs are associated with not granting credit?
What are some similarities between predictive policing and the social credit score? What are some differences?
Chapter 6 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Related to ethics and contracts, why do payday loans appear to be an ethical issue?arrow_forwardExamine the economic environments influence on personal financial planning.arrow_forwardIdentify two important pieces of information that should be included in the borrower's credit history. Explain how each of these pieces of information influences the approval or rejection of the application for financing.arrow_forward
- Credit availability, paying habits of customers, and rates of return are considered in the Multiple Choice third screening. first screening. fourth screening. second screening.arrow_forwardGive typing answer with explanation and conclusion What exactly is the DCR and how to lenders use it? Is there is a range they would find acceptable? In general, do they want it to be high or low? Why is that?arrow_forwardWhat are the benefits and risks of using digital payment as a customer?arrow_forward
- Before taking out a consumer loan, you should be sure the purchase is compatible with your financial plans and budget. Discuss the loan features you would take into consideration when shopping for credit.arrow_forwardGive one advantage of using a vouchers payable system.arrow_forwardCan a credit entry be described as a generally positive or negative transaction? Explain.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage