CREDIT VOCAB
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Transcript of CREDIT VOCAB
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CREDIT VOCAB
APR• Annual percentage
rate; the annual rate of interst that is charged for using credit
acceleration clause• A provision in an
installment loan contract that gives the seller the right to declare the whole balance due if the buyer misses even one installment payment
add-on clause• A loan contract
provision that allows purchases to be added to an existing installment loan, with earlier purchases used as security for later ones
Asset• An item of value you
own, including money
Bankruptcy• Legal relief from
repaying certain debts
balloon payment• A final loan payment
that is much larger than the other installments
Capacity• A person’s ability
repay debt from regular income
Capital• A person’s finacial
resources
cash credit• Used to borrow money;
often used to purchase goods and services from sellers who do not give credit. Types of cash crdit include installment loans, single-payment loans, and credit card or check credit limits.
Character• A person’s reputation
for honesty and financial history
closed-end credit• A one-time extension
of credit for a specific amount and period of time
Collateral• Property that is
pledged to guarantee payment of a loan
collection agency• A business that
collects unpaid debt for other companies or organizations
Cosigner• A responsible person
who signs a loan as a co-borrower and thereby agrees to pay the obligation if the primary borrower fails to do so
consumer finance company
• Businesses that specialize in making small or personal loans
Credit• The supplying of
money, goods, services at present in exchange for the promise of future payment
credit counseling• Guidance provided by
trained people who help consumers learn to live within their means
Creditor• A person or business
who supplies money, goods, or services to debtors
credit bureau/ credit reporting agency
• An organization that keeps a running record of the financial and credit transactions of credit users and the credit worthiness of consumers. They sell information to creditors, landlords, insurers, employers, and other businesses.
credit history• A pattern of past
behavior in regard to repaying debt
credit limit • The maximum amount
of credit that a creditor will extend to a borrower
credit rating• A creditor’s evaluation
of a person’s willingness and ability to pay debts as judged by character, capacity, and capital
credit report• A record of a
particular consumer’s use of credit and account payment patterns
credit score• A numerical rating,
based on credit report information, that represents one measure of a person’s level of credit worthiness
debt consolidation loan• A loan that combines
all existing debt into a new loan with a more manageable payment schedule
Default• Failure to fulfill the
obligations of a loan
Delinquent• Overdue
down payment• A portion of a
purchase price paid by cash or check at the time of purchase, reducing the amount borrowed
finance charge• What the consumer
pays for the use of credit, including interest charges and any other fees
grace period• Period of time during
which the balance on a credit card may be paid in full to avoid finance charges
Garnishment• The legal witholding of
a sum from a person’s wages in order to collect a debt
impulse buying• Buying items that are
not really needed
installment credit• A form of credit that
may be used to purchase expensive items like cars or major appliances. With installment credit, the buyer makes payments in equal dollar amounts that include finance charges.
installment loan• A loan where you
borrow a set amount of money and repay it plus finance charges in a series of scheduled payments
Interest• A fee paid for the
opportunity to use someone else’s money over a period of time
Lien• A claim upon property
to satisfy debt
Liabilities• Amount a person
owes, such as unpaid bills, credit card charges, personal loans, and taxes
loan shark• Unlicensed lender who
operates illegally and chargse excessive interest
net worth• The difference
between your assets and your liabilities. Expressed by the formula: assets – liabilities = net worth
open-end credit• Credit that can be
used repeatedly. Sometimes referred to as a line of credit
Principal• The original amount
borrowed
regular charge account• A type of sales credit that
allows customers to purchase goods and services on credit and pay the bill in full in 25-30 days. If you do this, you are not charged interest; however, you may be charged interest if you do not pay the full amount.
Repossession• Taking away property
due to failure to make loan or credit payments
revolving credit• A form of credit in which the
total amount of the bill does not have to be paid each month; however, a finance charge will be figured on the amount not paid. Additional purchases can be made even though money is owed on previous purchases. The lender typically establishes an approved credit limit to represent the maximum amount of credit available. Credit cards are usually revolving credit.
right of rescission• The right, provided by
the Truth in Lending Act, that gives borrowers up to three business days to cancel a loan or other credit transaction for which their home is pledged as security
sales credit• Credit used to
purchase goods and services
single payment loan• A loan where you
borrow an amount of money and repay that amount plus finance charges in one payment
secured credit• Credit that is backed
by a pledge of property
• unsecured loan - Generally, a loan that only requires a signature promising to repay the loan as stated in the contract; not backed by collateral or pledge of valuables