in14 - Chapter 7: Planned Borrowing Objectives Discuss the...

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Chapter 7: Planned Borrowing
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Objectives Discuss the elements of the planned use of credit. Establish your own debt limit. Understand the language of consumer loans. Describe the sources of consumer loans.
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Objectives Calculate the APR and finance charges on both single-payment and installment loans. Recognize signs of over-indebtedness, know what to do when it occurs, and explain your rights regarding credit collection and bankruptcy.
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Planned Borrowing Most people use installment credit 12+ times during their life. Yet, only 1:3 shop for credit terms! DID YOU KNOW!
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Planned Borrowing A knowing decision to borrow to finance a purchase or simply to borrow cash.
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Planning Your Credit Usage When How often How much THE TASK OF DETERMINING:
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The debt limit most people establish for themselves is lower than what lenders would be willing to lend. Establishing a Debt Limit
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Debt-payments-to-disposable-income method Ratio of debt-to-equity method Continuous-debt method Establishing a Debt Limit
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Credit Capacity Indicators * Not including housing Debt Payments-to-Income Ratio monthly payments * monthly after tax income 6-9
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Credit Capacity Indicators Debt To Equity Ratio total liabilities net worth * = Should be < 1 *Excluding home value 6-10
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Debt-Payment Limits as a Percentage of
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in14 - Chapter 7: Planned Borrowing Objectives Discuss the...

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