Consumer Education

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Consumer Education

• Credit

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What is credit???

• The cost of borrowing money

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Who can borrow money???

• 18 years old
• Proof of worthiness

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Credit Worthiness

• Character
• Payment history on previous loans
• Capital
• What you own of value
• Capacity
• Earning power

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Who can borrow money???

• 18 years old
• Proof of worthiness
• Good credit history

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Who can borrow money???

• 18 years old
• Proof of worthiness
• Good credit history
• Low risk lower interest

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Can I be denied credit???

• Credit may be denied for the following reasons
• High risk due to late payment history
• Financially over-extended

• Credit may not be denied based on
• Sex
• Race
• Religion
• Marital status
• Income from public aid

Can I be denied credit???
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How to creditors obtain my credit history???

• Credit Bureaus
• These firms collect information about the paying
  habits of customers, and then that information is
  sold to creditors.

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What if the credit report is wrong???

• Fair Credit Reporting Act
• This act protects your right to have
  incomplete or incorrect information removed from
  your credit report.

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How do creditors verify my earning capacity???

• Telephone/Pay stubs
• Creditors will call your employer to verify your
  employment status and wages.
• In addition, they usually require
• copies of recent pay stubs.

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Where can I get a loan???

• Banks
• Pawn Brokers
• Credit cards
• Stores
• Finance Companies
• Insurance Companies

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We can not forget loan sharks, but YOU should!!!!
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How much will the credit cost???
Interest rate Length of loan Amount borrowed
Total interest
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What if I had a down payment???

• A down payment is money you paid before being
  issued the credit.
• It is subtracted from the item cost.
• Interest is calculated on the actual amount
  borrowed, which is
• Total price down payment

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How much will the payments be???
Amount borrowed total interest
Divide by number of months to repay
Your monthly payment
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Car Loan

• Car 10,000
• Interest Rate 8 percent
• Length of Loan 4 years

Total interest 10,000 .08 4 3200
Monthly payment (10000 3200) / 48
275/month
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Internet Credit Activity

• Group 1 Using a loan calculator, what would
  payments be for a 100,000 home with 10,000 down
  payment, 8 interest, for 30 years??? What will
  your total interest be??? What will your total
  cost be???
• Group 2 What guidelines are set up determine
  how much house one can afford to buy???
• Group 3 Where can one seek credit counseling???
• Group 4 What is identity theft???
• Group 5 How does one build positive credit???

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Internet Budgeting ActivityThe Directions!!!

• Your group will use the internet to research your
  topic.
• Design a short PowerPoint presentation containing
  the results of your research.
• You will have 30 minutes to complete the project.

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Organize Your Group!!!

• Timekeeper Watch the time!!! Conduct the
  internet search.
• Recorder Write down the information found on
  the internet.
• Designer Design the PowerPoint presentation.
• Presenter Present the information. Assist with
  search and design.

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