4. CREDITa. What is a creditThe term credit comes from the Latin crditum meaning “that which is entrusted or loaned” from the past participle of credere “to trust or entrust”2 credit definition amongst many :Credit is money a creditor or lender makes available for you to borrow with a deferred repayment. In exchange for the credit, the lender gets back the money, plus interest. The debtor gets the use of the money to pay for and take possession of goods and services immediately.Modern society is dependent upon credit to generate sales; it enables people to have the things they want and need, but can’t afford to pay for right away.Interest is the compensation that the creditor demands for the use of his/her money. Money has a ‘time value’ to it. Over time the value of money decreases (due to inflation) : what a dollar will buy today is much less than what a dollar could purchase 20 years ago. Since a creditor pays out money today in exchange for a repayment of it in the future, the creditor loses the time value of that money.AndOne of the most important is “financial trustworthy”.Credit is amount money given by the bank to the customer …
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