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Arkansas Intro to Finance Unit 2

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Annual percentage rate (APR)   the cost of credit expressed as a yearly percentage  
Bankruptcy   a legal process that relieves debtors of the responsibility of paying their debts or protects them while they try to repay  
Capacity   the ability to repay a loan with present income  
Capital   property possessed that is worth more than debts owed  
Character   a responsible attitude toward living up to agreements  
Closed-ended credit   a loan for a specific amount that must be repaid in full, including all finance charges, by a stated due date  
Collateral   property pledged to a creditor to assure repayment of a loan  
Comparison shopping   a shopping method that enables consumers to determine whether they are getting the best quality for the price  
Consumer advocate   a person who actively promotes consumer causes  
Co-signer   a person who promises in writing to repay a promissory note if the maker fails to pay  
Credit   money borrowed to buy something now with an agreement to pay for it later  
Credit bureau   a company that gathers, stores, and sells credit information to business subscribers  
Credit history   the complete record of your borrowing and repayment performance  
Credit rating   a measure of credit-worthiness based on an analysis of a consumer's financial history  
Credit report   a written statement of a consumer's credit history issued by a credit bureau to its business subscribers  
Debtor   a person who owes money to others  
Discharged debts   debts erased by the court during bankruptcy proceedings  
Discrimination   treating people differently based on prejudice rather than individual merit  
Down payment   a part of the purchase price paid in cash up front, reducing the amount of a loan  
Finance charge   the total dollar amount of all interest and fees you pay for the use of credit  
Finance companies   small loan companies that usually charge high interest rates  
Fixed-rate loans   loans for which the interest rate does not change (up or down) over the life of the loan  
Fraud   the intentional misrepresentation of information with the intent to deceive or mislead  
Garnishment   a legal process that allows part of your paycheck to be withheld for payment of a debt  
Interest rate   the percentage charged for the use of money  
Line of credit   a pre-established amount that can be borrowed on demand with no collateral  
Needs   ingredients necessary for maintaining physical life  
Open-ended credit   an agreement to lend the borrower an amount up to a stated limit and to allow borrowing up to that limit again whenever the balance falls below the limit  
Opportunity cost   the value of your next best alternative whenever you make a choice  
Prime rate   the interest rate lenders offer to their best business customers  
Principal   the amount borrowed, or the unpaid portion of the amount borrowed, on which the borrower pays interest  
Service credit   an agreement to have a service performed now and pay for it later  
Simple interest   interest computed on the amount borrowed only without compounding  
Statement   an itemized bill showing charges, credit, and payments posted to your account during the billing period  
Time   the length of time the borrower will take to repay a loan; expressed as a fraction of a year  
20/10 rule   your total borrowing should not exceed 20 percent of your yearly take-home pay, and you should not take on monthly payments that total more than 10 percent of your monthly take-home pay  
Unsecured debt   a loan that is not backed by pledged assets  
Unused credit   the remaining credit available to you; calculated as your credit limit minus the amount you have already spent  
Values   the ideals in life that are important to you and affect your decision making  


   




 
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