What Is Trade Credit?

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Trade credit is a loan between two parties with interest rates that vary significantly depending on the parties, their credit scores and the type of product involved. Consider the payback period, the interest rates and the penalties associated with trade credits using information from a financial adviser in this free video on trade credit and loans.

Part of the Video Series: Investments & Money Management Tips
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Have your suppliers given you a product to sell with 30, 60, 90, 120 days to pay them back? Hi this is Roger Groh at Groh Asset Management. Trade credit is just a loan between two parties with interest rates that vary significantly depending upon the parties involved, their credit scores and the type of product involved. Also governments frequently get involved especially if they are exports and export is very good for the country selling the goods and services. Might that help in your credit score? Yes. Might that drive down the rate that you pay on your loan? Yes. Things to consider in any loan, pay back period is one. Number two, interest rates, number three might be penalties. Last but not least, if you get a copy of the prospectus or the loan agreement it should be spelled out clearly in there. If it's not, give it to your lawyer, have them review it and then have them explain it to you before you make any commitment. I'm Roger Groh at Groh Asset Management. Thank you very much for spending time with me.

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