Borrowing Money

Borrowing is the transfer of a specified amount of money from a lender to a borrower for a specified length of time. Business people borrow money to begin or expand their busi­ness, and federal, state, and local governments borrow money to finance their programs and operations. Credit is the pur­chase of goods and services without the actual transfer of money on the promise to pay later. Even wealthy consumers consider the use of credit necessary when purchasing expen­sive items such as houses and automobiles.

Consumers borrow money and use credit for two main rea­sons. First, buyers can enjoy the use of an item while paying off the debt. They do not have to postpone purchases until. they have enough money to pay for the items in cash. Second, consumers can extend payments for expensive items over a period of time. Payments for home mortgages typically run for 20 to 30 years. Houses are made affordable in this man­ner. Credit payments for televisions, major appliances, and other expensive items often run from one to five years.

The money borrowed is called the principal. The amount paid by the borrower for the privilege of using the money is called the interest. Both the principal and the interest are included in the loan's repayment. Most loans are secured loans, which require that borrowers put up collateral. Collateral is something of value offered by the borrower as a guarantee that the loan will be repaid. If the loan is not repaid according to the terms of the loan agreement, the lender may take the borrower's collateral. Unsecured loans requiring no collateral are rare and usually involve small amounts of money and short periods of time.

A common consumer loan is an installment loan. Repayment of the principal and interest is divided into equal amounts according to the length of the loan period, typically 12,18, 24, or 36 months. The length of repayment of the loan is important in determining the amount of the monthly pay­ment. The longer the loan period is, the smaller the monthly amount the consumer must pay. Buyers who can afford high­er monthly payments prefer the shorter loan period because it

is less expensive.

The most common use of an installment loan is a home mortgage. A mortgage is an installment debt owed on land buildings, or other real property. The mortgagee must repa?

the mortgage in installments for fixed number of years, usu­ally between 15 and 30 years. The loan is secured by the prop­erty, which is forfeited if the loan terms are not met.

Buying on Credit

In the use of credit, no money changes hands directly. Rather than requiring money for a purchase, businesses allow a customers to charge their purchases and to pay for them over a period of time. Customers who do not pay their charges in full each month pay interest on the unpaid principal until the full amount is repaid. Consumers who want credit must apply for it and must have their credit approved before the credit can be used. The creditor evaluates information about the purchaser and assigns that person a credit rating. A credit rating is an estimation of the probability of repayment.

Creditors are particularly concerned about an applicant's 4-Cs - character, capacity to pay, capital, and credit history. An applicant who satisfies the 4-Cs is likely to receive a high credit rating, meaning the person is a good credit risk. An applicant who fails to satisfy the 4-Cs is usually assigned a low credit rating.

Words and Expressions

borrow - занимать деньги; заимствовать; брать взаймы; брать в кредит

borrower n - заемщик; берущий взаймы

capacity to pay - платежеспособность

character n - репутация

charge interest - начислять проценты, взыскивать процен­ты

collateral - имущественный залог; дополнительное обеспе­чение; гарантия, поручительство (финансовое)

college tuition payment - плата за обучение в колледже,

commercial bank - коммерческий банк J

credit n - кредит; долг

credit history - кредитная история (записи займов и вы­плат по ним определенного лица)

credit payments - выплаты по кредиту

credit rating - оценка кредитоспособности

credit risk - кредитный риск

disposable income - доход, остающийся после уплаты нало­гов, чистый доход

down payment - первоначальный взнос, первая выплата,

аванс (напр. при покупке в рассрочку)

forfeit и - лишиться в результате конфискации, потерять право на что-л.

home mortgage - ипотека; залог; заклад; закладная

insurance payment - страховой платеж

installment loan - ссуда с оплатой в рассрочку

interest n - проценты (на капитал)

interest rate - процентная ставка

lender n - заимодавец, кредитор; ростовщик

loan n - заем; ссуда; кредит

loan period - срок возвращения займа

meet retirement needs - оплачивать пенсионные нужды

money market account - накопительный счет, депозитный счет денежного рынка

mortgage n - заклад; ипотека, закладная

mortgagee n - кредитор по закладной

NOW (negotiable order of withdrawal) account - текущий счет с выплатой процентов и списанием по безналич­ным расчетам (типа чеков)

passbook savings - сбережения на банковской сберегатель­ной книжке

passbook account — сберегательный счет с выдачей сберегательной книжки

principal n - основная сумма, капитал (сумма, на который начисляются проценты)

principal and interest - капитал и проценты

pool of money - общий денежный фонд; объединенный резерв капитала

real property - недвижимое имущество

regular savings account - обычный сберегательный счет

repayment — уплата (процентов), выплата (основной сум­мы)

saving rate - норма сбережений

savings n - сбережения, накопления

savings account - депозит, сберегательный счет

savings bank - сберегательный банк

sayings deposit - сберегательный вклад

Treasury (the) - государственное казначейство, министер­ство финансов

Treasury bills - краткосрочные казначейские векселя

time deposit - срочный депозит; вклад на срок

Дата добавления: 2014-12-29