We examined the third component which is financing for major purchases. We learned the purpose of down payments in long-term financing. We discovered that big ticket purchases are collateral for the lender because they can repossess the item. We understand that the lenders make money on the interest they charge you for borrowing their money. Lenders determine your overall credit worthiness which is an assessment of how likely you are to pay back the loan. We discovered that lenders will loan you more money than you should borrow so you need to develop your own financial plan for paying for big ticket items.