This is just a simple article I picked up on that sort of gives root to the term credit. I thought it may be a short and interesting read…
Borrowing – as in the case of a car title loan, has long been part of the American way of life. “Neither a borrower nor a lender be has given way to an enormous system of borrowing and lending that has enveloped the entire economy”. Without credit, government, business. And individual spending would grind to a halt within a short period of time.
Consumer installment credit has particularly exploded since the end of World War II, when pent-up demand for durable goods helped to fuel the first of the post war booms. In the 1980’s alone, this form of debt doubled. Not only did many more consumers use debt during the last decade, but the median amount of credit incurred as well. And nowadays we have loans of all different shapes and sizes from bank loans, personal signature loans, and a handful of the growing popularity of the payday loans, and title loans (also refered to as a title pawn)
Consumers have taken out loans to buy homes, automobiles, furniture, vacations, medical and dental care, and just about every other possible product and service available. Many have borrowed wisely and well, while many others have borrowed at the wrong time, the wrong place, or the wrong price. Your ability to be in the first category of borrower, rather in the second has a lot to do with your ability to achieve financial fitness – both in real terms and as a state of mind.
Meaning of credit
The word credit is derived from the Latin word credo, which means I believe. A person who is credible is one who is believable. When you ask a bank, department store, or other source for credit, you are asking that source to believe in you.
Throughout history, credit has been one way of transferring resources from the haves to the have-nots. Early moral and legal codes often recognized two distinct types of loans. The first kind was of food, clothing, and other necessities, and lenders were not allowed to charge interest on these items. The second was of animals and seeds, was loaned to increase the numbers of what was borrowed. A portion of that increase, whether the first-born young animal or the first crop harvested, was given as interest to the provider.
Now of course, these distinctions have been eliminated and all borrowers are expected to pay interest on whatever loans they undertake, unless there are special circumstances like a loan from a family member or close friend. When people borrow today, out of necessity or for convinience, they rent a certain amount of money (the principle) for a certain length of time (the term) by paying interest (the finance charge)