Answer to Question #121302 in Accounting for Olu JOSEPH

Question

Jamie has a full time job earning £400 a week. He has booked a holiday costing £1 400 and he will have to pay for it in full by the end of the month. He does not have enough money to do this at the moment. Usually after paying his bills he has around £100 for personal spending. He is unsure whether to apply for an overdraft or a personal loan to make this payment for his holiday.
5 Assess whether an overdraft or a personal loan would be better for Jamie

Answer 1

If an overdraft fee less than interest rate for loan and less 400$ in month, the overdraft better for Jamie. If loan rate meets these conditions (less than an overdraft fee and less 400$ in month), the personal loan better for Jamie. Otherwise Jamie is better giving up vacation.