ways of finance (bussiness studies)

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Business studies coursework

Finances

there are many diffrent types of finace but normaly finace is put in to two sectors sort term and long term finace. i will explain to you what short and long term finace is and what types of finace are in the two.

Short term finances:

Short term finances are used by people and business. It is money given to people for a short amount of time that is normal given to people for about 30 day up to 5 years. Short term types of finances are used to keep a business running not to be used when it is first starting up.  Below is the different type of short term finances.

  1. Overdraft (short term)

An overdraft is a short term way of barrowing. It allows you to have money after your balance has run out. But has a high interest rate. The Disadvantages are like has to be paid with in 30 days, have to pay high interest on top of money, after an amount of time you will get fines , has a limit on how much you have a day. The interest of an overdraft is high. There are is good thing to overdrafts as well the advantages are quick way of getting money, if you have a high overdraft you will be able to pay a bill of £1,500 and not worry about cheques bouncing if you have a draft of £5,000 the bank will pay out to the person or company without paying interest to the bank. You my have to pay interest if you do not pay back with in 30 days.

  1. Bank loans (short term)

A bank loan is where you take an amount of money from your bank but you will have to pay a high interest on top of the amount you have borrowed for example you borrow £100 you will have to pay back anther £10 on top so you will be paying back £110 back to the  . There are disadvantages high interest and I not paid back it can be taken back by your asset taken away. The advantages are allowed to take a big amount out and can be paid over a long amount of time. A bank loan is normally used to buy a new car or to pay some of your bills off is just a couple of examples that are used with bank loans you can use the capital for what ever you want to buy.

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  1. Leasing (short term)

A lease is were you have a peace of property for a amount of times after that time it is returned to the owner or can be renewed. The disadvantages it dose not belong to you, only have a small amount of time to use it. The advantages are if there are any problems with the product you do not have to deal with it. An example of leasing a digger for building work or some equipment that you only need one.

  1. Trade credit (short term)

Trade credit is where a ...

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