CHAPTER 8 – BORROWING tsio 1. Copy and fill in the blanks.
a. A loan is a sum of money that is borrowed from a financial institution and then paid back in ____________.
b. Something of value that the borrower promises to give to the lender in the event of non-payment is called ____________.
c. A ____________ is a person who agrees to pay the loan if the applicant is unable to pay. d. A ____________ is a loan for a house or other property. It is a ____________ term loan.
e. ____________ ____________ Rate is the annual rate charged on a loan. Interest is only charged on the balance yet to be paid.
f. ____________ ____________ allows a person to use goods while they are paying them off. g. A sum of money that is owed or overdue is called a ____________.
2.
a. Divide the following expenses into short term, medium term and long term. • Electricity bill • Mortgage
• Buy a new car • Groceries.
b. Suggest a suitable source of finance for each expense.
3. Outline three rights that borrowers have. 4. Name two advantages and two disadvantages of using a credit card.
5. Look at the following graph produced by the Central Bank of Ireland showing household debt from 2004–2015.
a. In which year was household debt the highest?
b. In which year was household debt the lowest?
c. What is meant by the term ‘disposable income’?
d. Why do you think debt increased steadily over the period 2004– 2008?
