Adina Campbell investigates loans and credit, a topical issue as more than two thirds of 18-24 year olds in the UK have some form of debt. She meets Michelle who is looking to buy her first car, and they find out what finance options are available. They discuss bank loans, credit cards and pay day loans, comparing their APRs and overall costs. Explanations are given as to how each of these methods work and the dangers inherent in making the wrong decisions. Financial expert Martin Lewis outlines the questions you should ask before taking on debt.
- This clip is from:
- First broadcast:
- 18 January 2013
Discuss what credit and debt are and what students would consider as good and bad debts. Students could plan a similar major purchase and research, compare and contrast a range of personal finance products and, after making calculations, explain their choices. Explain the concepts of interest and APR in more detail and use comparison sites and online calculators to see the differences that the choice of financial product can make. Relate this to study of appreciation and depreciation. Investigate the costs of a car, including initial purchase, fuel, insurance, road tax and maintenance. Comparisons can also be made between the cost of having a car and using public transport, walking or cycling.