Question

Why do you think people save money in advance for a vacation but tend to finance a consumer purchase and pay later? What are the factors involved?

Answer 1

Yes, I think people save money in advance for a vacation but they will tend to financer customer purchase and pay later because people will be always trying to save money for some specific goals but they are not fully planned for their day-to-day life so they will be likely to purchase the consumer goods on credit in order to help themselves through credit abilities as they will be trying to save large sum of money in order to have a better vacation

they also think that there would be a large sum of money which will mean that that we have higher rate of return on that money and it can easily finance their vacations whereas, normal consumer goods which are used in day to day life are taken on credit as they will have to be repaid quickly.

The factors which are involved will be time value of money along with compounding and future value and credit worthiness of buyers.