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Econ. Ch. 4 Vocab.
| Question | Answer |
|---|---|
| credit | receipt of funds either directly or indirectly to buy goods and services in the present with the promise to pay for them in the future |
| principal | amount originally borrowed in a loan |
| interest | amount the borrower must pay for the use of someone else’s funds |
| installment debt | type of loan repaid with equal payments, or installments, over a specific period of time |
| durable goods | manufactured items that have a life span longer than three years |
| mortgage | installment debt owed on houses, buildings, or land |
| commercial bank | bank whose main functions are to accept deposits, lend funds, and transfer funds among banks, individuals, and businesses |
| savings and loan association (S&L) | depository institution that accepts deposits and lends funds |
| savings bank | depository institution originally set up to serve small savers overlooked by commercial banks |
| credit union | depository institution owned and operated by its members to provide savings accounts and low |
| finance company | company that takes over contracts for installment debts from stores and adds a fee for collecting the debt; a consumer finance company makes loans directly to consumers at high rates of interest |
| charge account | credit extended to a consumer allowing the consumer to buy goods or services from a particular company and to pay for them later |
| credit card | credit device that allows a person to make purchases at many kinds of stores, restaurants, and other businesses without paying cash |
| finance charge | cost of credit expressed monthly in dollars and cents |
| annual percentage rate (APR) | cost of credit expressed as a yearly percentage |
| credit bureau | private business that investigates a person to determine the risk involved in lending to that person |
| credit check | investigation of a person’s income, current debts, personal life, and past history of borrowing and repaying debts |
| credit rating | rating of the risk involved in lending to a specific person or business |
| collateral | something of value that a borrower lets the lender claim if a loan is not repaid |
| secured loan | loan that is backed up by collateral |
| unsecured loan | loan guaranteed only by a promise to repay it |
| usury law | law restricting the amount of interest that can be charged for credit |
| bankruptcy | the state of legally having been declared unable to pay off debts owed with available income |
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hcmeek
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