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personal finance
| Question | Answer |
|---|---|
| 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 |
| cash advance fee | fee for withdrawling cash on your credit card |
| 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
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