CHAPTERS 6 & 7

CREDIT SYSTEM SOURCES OF CREDIT

REASON FOR CREDIT.

NO MONEY CONVENIENCE

Foundations of a System of Credit

Absolute confidence

Credit Facilities

Money Standard Stable

Government

CREDIT
The ability to obtain a thing of value in exchange for a promise to pay with money or something equally satisfactory to the seller at some future time CHARACTERISTIC OF CREDIT

POWER

OBLIGATION

CLASSES AND KINDS OF CREDIT

ACCORDING TO TYPE CONSUMER CREDIT RETAIL CREDIT CHARGE ACCOUNT INSTALLMENT CREDIT CREDIT CARD

TRUTH IN LENDING ACT REPUBLIC ACT 3765

Excerpts:
1. 2. 3. 4. 5. 6. 7.

Cash price or delivered price of property and services acquired The amount to be credited as down-payment The difference between the amount set forth under clauses 1 and 2. The charges, individually itemized The total amount to be financed The finance charge in pesos and centavos The percentage that the finance charge bears to the total amount to be financed.

MERCHANTILE CREDIT AND BANK CREDIT

Mercantile credit also called commercial credit, an extension of time for payment, given by seller of merchandise to this customer Bank credit is govern by the following factors:  Limited transaction  Requirement of collateral or promissory note  General working capital purposes  Greater risk management and precaution.  Lesser competition compared to merchantile credit

MERCHANTILE CREDIT AND BANK CREDIT

Revolving credit is a type of credit that does not have a fixed number of payments, in contrast to installment credit. Examples of revolving credits used by consumers include credit cards. Corporate revolving credit facilities are typically used to provide liquidity for a company's day-to-day operations.

MERCHANTILE CREDIT AND BANK CREDIT

Investment Credit is utilized by business organization to purchase fixed assets or to carry minimum business operation, consist of advances intended for the purchase or construction of necessary plant and equipment. Derived from a. funds of individual investors, trustees of funds of individuals or estates, insurance companies, banking institutions and business concerns

ACCORDING TO MERCHANDISE OR MONEY MERCHANDISE CREDIT

EXAMPLE: APPLIANCE STORE, DEPARTMENT STORE, SARI-SARI STORE

BORROWING MONEY
EXAMPLE: BANKS, COOPERATIVES, PAWNSHOP

ACCORDING TO PURPOSE AGRICULTURAL CREDIT COMMODITY LOANS EXPORT CREDIT INDUSTRIAL CREDIT COMMERCIAL CREDIT REAL ESTATE CREDIT

ACCORDING TO MATURITY
SHORT TERM CREDIT Payable within one year from date of acquisition. Purchase of consumer goods, character loan MEDIUM OR INTERMEDIATE TERM CREDIT Its maturity ranges from 1 to 5 years. For financing improvements on firm, e.g. Installment buying LONG TERM CREDIT intended for 5 years and beyond; intended for investment purposes, plant, machineries,buildings.

GOVERNMENT OR PUBLIC CREDIT

Pledging of good faith and the resources of the nation for the repayment of a debt incurred on behalf of the people. Public Debt consist of all claims against the gov t which may be payable in goods or services, but usually in cash. Obligations may be: 1. Pure financial 2. Services rendered or goods delivered to the government for which certificates, notes or evidences of indebtedness was issued

Sources of credits
Individual Money Lenders Retail Stores Pawnshops Commercial Banks Commercial Paper House Savings Bank Rural Banks Development Banks Investment Banks Savings and Loan Associations Finance Companies Credit Unions Insurance Companies GSIS SSS AFPSLAI PAG-IBIG

The C s of Credit
      

Character Capacity Capital Collateral Condition Country Currency

The C s of Credit

The C s of Credit

CONFIDENCE

THANK YOU

PLEASE BE READY FOR A SHORT QUIZ