Question

Please discuss the impact that buying a $25000 through financing will have on the amount of money that you will be able to borrow for a new home mortgage.(250 word).

Answer 1

Buying $25000 throught financing is a kind of loan which you need to repay according to the terms of the loan agreement and Borrowing is to receive money from another party with the agreement that the money will be repaid ,In the question as it is mentioned that borrow for a new home mortgage, we can assume its saying about mortgage borrowing.Mortgage borrowing is a borrowing where you borrow amount of money by providing security(eg - Home,Jewellery ect).The borrower needs to pay principal along with the interest till the period loan conctinues.Both buying an Asset by financing and borrowing money both are loan and liability which borrower needs to repay.

The borrower either entreats a loan from a friend as a favour, or receives it from strangers as a matter of business. The former plan has the advantage of perhaps giving you as loan at a lower rate of interest than that at which you could borrow from a banker. In many cases friends lend money free of interest.Borrowing money is a most dangerous practice whenever any difficulty in the repayment is to be anticipated, that is to say, in the circumstances in which men ordinarily think of borrowing, poor, as a rule, men have recourse to this expedient when their expenditure exceeds their income, or when they wish to spend more than they can earn.on the other hand Asset finance is a type of lending that gives you access to business assets such as equipment, machinery and vehicles, or enables you to release cash from the value in assets you already own. Asset finance includes: Equipment leasing.