The creditor - that is, the one who grants the credit - allows the debtor - the purchaser who uses the credit - to own and use a commodity immediately on the basis of deferred payment of cost plus interest. How the loan is granted varies. If one buys a car, one normally gets a direct loan from a financial institution. the buyer takes possession of the car and repays the loan, with interest, over a specified number of months. Meanwhile, the financial institution retains legal ownership of the car until the loan is repaid. Buying a house, though a more complicated process, is quite similar.





From the time of the ancient world, lacking today's means of transportation, its universal acceptability made it the medium of exchange in long-distance trade and among people from different cultures and countries. Even after 4,000 years, since money was first invented, gold is still acceptable in any civilized society as money. Since everyone agrees it is valuable, it has universal purchasing power.