Question

You are attending college in the fall and you need to purchase a computer. You must finance the purchase because your parents will not purchase it for you, and do not have the cash on hand to purchase it. In Blank 1, determine which type of credit you would use to finance your purchase. (Installment, non-installment, or revolving credit.) In Blank 2, defend your credit choice by explaining why your financing option is the best option for you. In Blank 3, please explain why you selected that credit option over the other two options available

Answer 1

The correct answer is installment credit. The explanation is below.

Installment credit allows you to purchase an item and then pay for it in installments. The reason that this would be the best option for you is that you do not have the money now to make the purchase, but you are able to make smaller monthly payments in order to purchase a computer.

Installment credit is better than revolving credit for new borrowers. Revolving credit would allow you to charge additional purchases on your revolving credit account. The installment plan only finances one item, rather than like a credit card, which is how revolving credit works. You would not choose non-installment credit because this would require you to make this payment all at once in a short period of time. It would not allow you to spread the payments out over time.