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
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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.
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Chapter 6 Solutions
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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