• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Borrowing guide

Extracts from this document...


The point of this guide is to show you the different ways of borrowing and the advantages and disadvantages of each one. I will also give examples to help you understand. Borrowing is when you get or receive (something) on loan with the promise or understanding of returning it or its equivalent value. Borrowing is important because without it you wouldn't be able to afford it if you get into any money trouble. For example: if your business goes down hill and you have put your money in it and so you will lose everything when it shuts down. In this circumstance you would borrow money to help you get back on track. However in other circumstances you will have to control your urge to spend as it can have disastrous effects for example if your girlfriend wants some new shoes if you can't afford them don't buy them. TOP TIP!!! If you can't afford it, don't buy it!!!! To decide the best borrowing 'account' then you would have to decide how much risk and return you want. TOP TIP!!! The higher the risk the higher the return. For example if you put all your money into a business then you have a high risked chance of losing all the money. However if you have a share in a business then you will only be putting a small amount of money into something and also be able to carry on with your life quite normally. ...read more.


The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular instalments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. If you want a new television and you can't afford it then if you wanted the TV bad enough then you would take out a loan to pay for it if you can't afford it. (Not recommended. Just an example. :)) Abbey has a loan which: (tm) Is quick and easy to apply (tm) Get a decision in minuits (tm) Money caould be available within 24hrs Benefits from Abbey are: (tm) Great rates (7.9% APR) (tm) Borrow anything from �7,500 to �25,000 (tm) Pay it back from 1 to 8 years (tm) Repayments are fixed (tm) You don't have to be a current Abbey customer to apply. Advantages of loans are that when you need more money you can take out a loan and it will help you out. However the disadvantages of loans are that you can only take out a certain amount of money at a time and you have to pay more back than you have borrowed. This may get you into even more trouble if you can't pay it back. Credit Cards A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. ...read more.


A real life example of this is when you want to buy a television and you can't afford it then you can go to Bright House and pay a certain amount a week to get the television. Advantages for hire purchase is that you can get something that you wouldn't normally be able to afford you can get and pay in sections A disadvantage of hire purchase is that you cannot sell the item until it has all been paid for. Another disadvantage is that the product never belongs to you until you have paid the firm back in full and hence if you miss a payment, the organisation can take the product back. Recommendations If you are buying a house the best type of borrowing is a mortgage. Also if you need to borrow money take out a loan as if you have a credit card then you will be more tempted to use it for things that you don't really need. If John wanted to borrow a few �1000 then he should take out a loan. This is the best way as if you get a credit card then you could go into more debt that you want to. With a loan you only have a certain amount of money that you can spend and you can't go over that rate unless you take out another loan which will get you even further into debt. You also could get an overdraft from your bank for this amount. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Peer reviewed

    For this task I am going to compare three different types of loans which ...

    3 star(s)

    By choosing Alliance and Leicester I will be saving more money. I have taken up a loan because I need money for my start-up finance. Start- up finance is money used to buy the resources needed at the beginning, such as equipment and stock need for the shop.

  2. Basic Budgeting for Young Adults

    You may also feel safer in an apartment setting than if you lived alone in the isolation of a private home. Most apartment communities provide amenities such as pools, exercise rooms, and social gatherings. Of course, apartments come in many sizes and are offered at a wide range of prices.

  1. Investment Portfolio - Shares and other investments

    Most of the announcements and factors affecting WPL during the month were positive, which is a reason for such good performance over the month. Detail of share performance (Corresponds to the WPL graph) #1 On 7th Feb, Origin Energy bought Woodside Petroleum interests in offshore gas fields.

  2. Complete Report on Askari Commercial Bank

    Corporate Excellence Awards for 2002 & 03 The Management Association of Pakistan (MAP) Best Corporate / Institutional Internet Bank in Pakistan Award for 2004 by Global Finance magazine Best Consumer Internet Bank in Pakistan Award for 2002, 03 & 04 by Global Finance magazine The Best Bank in Pakistan Award

  1. computer system

    the right: * 00012 = 110 * 00102 = 210 * 01002 = 410 * 10002 = 810 Therefore: 11112 = 810 + 410 + 210 + 110 = 1510 This is a very simple example which still requires the addition of 4 numbers; whereas, with some practice, 11112 can be mapped directly to F16 in one step.

  2. Mr Carter has requested that I research the financial needs of potential and current ...

    Unsecured loan ? ? Credit Cards ? ? ? ? ? Savings and Investment Non-profit endowments ? ? Unit linked endowments ? ? School age/ youth (-16) Teenagers and students (17-22) Post education pre-families (23-30) Young families (30-40) Established families (40-50)

  1. This paper discusses the statement 'in a politically charged rulemaking environment, conceptual frameworks has ...

    As stated by Raymond Chambers (1973), "Policy-making is 'choosing which' when the choice is a matter of opinion or taste or some other personal or organizational criterion." As Albert Einstein once remarked, "Mathematics is hard enough, but political science

  2. With reference to the local area would the opening of a new business represent ...

    Conclusions and Recommendations Evaluation I have reviewed all three of my properties and they all have many advantages and disadvantages. The properties are located in different parts of the city in well established commercial areas. Property 1, 1 Kingston Road, is located on the corner of Evington Road and Kingston Road.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work