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personal finance

Credit a tool to buy something now and pay for it later.
microloans small, short-term loans
instant gratification you didnt budget for the purchase and dont want to wait until you have the money to buy the item.
simple interest formula multiply the interest rate by the amount borrowed, and then the amount is multipliedby the number of years you take to repay what you borrowed.
amortization calculation formula Payment amount equals the initial principal loan amount times r(1+r)to the n power, over (1+r) to the n power -1. r= interest rate per period. n equals total number of payment periods.
principal another word for money
interest the amount you pay to use someone elses money, usually a percentage of the principal.
APR(annual percentage rate) the interest rate calculated in a consistent way so its easier to compare different borrowing options.
Introductory APR "teaser" rate for a short period of time to tempt you to borrow.
Fixed Interest rates stay the same for the life of the loan or account
Adustable or variable interest rates change at specific times, such as every month or year. as rate goes up or down your payment will change too
maturity date the final payment date of a loan.
loan term the amount of time youre obligated to make payments
annual fee a yearly fee for having an open account
over the limit fee your credit limit has been exceeded, this fee will go up each time you go over the limit
credit limit the maximum amount you can borrow at one time
grace period the amount of time before interest rates start accumulating on charged purchases
loan term longer loans usually have lower payments, but accumulate more interest.
organization fee a charge to process your loan
prepayment penalty always check before making a loan commitment to know about any extra charges if you make early payments
down payment money you pay upfront for the purchase to reduce the loan amount.
discount points some lenders offer interest-rate discounts as incentives
revolving credit lets you borrow up to a maximum dollar amount whenever you want, without applying credit each time.
installment credit, close ended credit the entire loan amount is paid to you at once.
cash loans personal loans
service credit lets you pay in full, usuaully monthly, for a service as charges add up.
authorized user able to use the credit card account but is not legally liable for the balance due on the account
joint account holder equally responsible for the balance of the account along with the other person named on the account.
capital you need the money to borrow money
capacity lenders make sure you have money coming in more than whats going out
character lender wants to make sure you are responsible with your money
credit reports a way for lenders to check your reputation
collateral things that you have that you can give to the lender if you cant pay them back
conditions lenders will check that if you have been an identity theif or anything that yoiu are moving on from the past
cosign lender may require someone to cosign on the agreement if you cant provide acceptable information
cosigner agrees to repay the debt if you dontand needs to be approved by the lender
credit score a three digit number based on the persons credit report.
subprime borrower someone lenders see as a big credit risk
identity theft your identification documents are taken or online personal files are hacked without your permission
identity fraud your personal information is used to make purchases, withdraw cash, or set up new accounts without your approval
Created by: bgibson11