Question

Part II: Reflection 1. Why do people sometimes use credit to pay for items instead of just using cash? 2. When applying for credit, is it preferable to receive a low interest rate or a high interest rate? 3. Sometimes, lenders allow or require a downpayment before they extend you the loan. What would be the advantage to the lender? What would be the advantage to the borrower?!

Answer 1

(1) Why do people sometimes use credit to pay for items instead of just using cash?

Some people use credit to pay for items instead of just using cash so they do not have to carry money around and so it is easier. Or in other terms, Many people use credit card to pay for things rather than only currency, so it's easier to carry money.

(2) When applying for credit, is it preferable to receive a low interest rate or a high interest rate?

It is preferable to receive a low interest rate so you do not have to pay high amounts. Or simply we can say, It is easier to get a low interest rate so that you don't pay high rates.

(3) Sometimes, lenders allow or require a downpayment before they extend you the loan. What would be the advantage to the lender? What would be the advantage to the borrower?

The advantage to the lender would be that they have that they have a chunk of money before they have the rest of the loan and the advantage to the borrower would be that a portion of the the loan is already paid off. Or in the other way we can conclude that, The downside for the investor is that before the remainder of the debt they have a chunk of money, and the gain for the borrower is that a section of the loan is already paying.