Post on 08-Jan-2016
description
SECTION 1MONEY
£££ £
£
£
Choosing to Borrow Money
Mr Tarn
GCSE ECONOMICS: UNIT 11
SECTION 1MONEY
£££ £
£
£
Aims of today’s lesson …
• Understand why people borrow
• Understand methods of borrowing money
• Understand the impact of changing interest rates
SECTION 1MONEY
£££ £
£
£
How do you feel about borrowing?
• Lets see how other people view borrowing….
SECTION 1MONEY
£££ £
£
£
What would you borrow money for?
• Lets see what other people would borrow money to buy….
SECTION 1MONEY
£££ £
£
£
Case Study: Why Borrow Money
• There are times in our lives when we need to buy something but may not have the cash to pay for it there and then
• At times like that we may decide to borrow the money
• Meet Becky who is hoping to buy
a car
• You are going to help her consider her options
SECTION 1MONEY
£££ £
£
£
The impact of interest rates on Borrowing/saving money…
• The bank’s interest rate is the PRICE or COST of borrowing money AND the REWARD for saving money
For example you might borrow £1,000 from a bank…
…however, they will not give you the money for free you will have to repay the £1,000 plus interest
If you put money into a bank you will gain interest as a ‘thank you’ for saving your money with them
SECTION 1MONEY
£££ £
£
£
The impact of changing interest rates on Borrowing/saving money…
• Banks and building societies regularly change their interest rates
• A change will have a major impact upon consumers, savers, borrowers, homeowners and businesses
Q. What would be the impact on homeowners who have a mortgage if the interest rate were to increase?
A. If they have a variable rate mortgage their repayments with change directly with the interest rate set by the bank; therefore a rise in interest rates will increase repayments, meaning they have less disposable income!
SECTION 1MONEY
£££ £
£
£
Over to you...
• Open and compete the document called...
“Choosing to borrow money”