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Credit Basics
| Question | Answer |
|---|---|
| Credit | promising to pay back money you use |
| Credit availability depends on | trust |
| 3 Credit Sources | *Private mortgage companies *Credit Card Resources *Pawn Shops |
| Financial Stress | can happen when credit isn't managed responsbily |
| Recommended Amount to Borrow | total- less than 20% of income monthly- less than 10% |
| 3 Benefits to using money saved or invested instead of credit | *Having a credit card *Purchasing a vehicle *Investing in your human capital with an education loan |
| Closed-end Credit | Loan which the borrower must repay the amount in a specifed number of payments |
| Open-end Credit | Extended line of credit established in advance |
| Payday Loan | a relatively small amount of money lent at a high rate of interest on the agreement that it will be repaid when the borrower receives their next paycheck |
| Rent-To-Own | borrower leases tangible items with the condition that the item will be owned by renter until rent is complete |
| Title Loan | The borrower gives the lender his/her automobile title in exchange for a set amount of cash. The lender holds the title until the loan is repaid. If the loan is not repaid as agreed, the lender keeps title to the item. |
| Pawn Loan | quick way to get money without credit but the item you are buying is taken from you and all the money is kept if the loan is not paid |
| Refund | Lender givers borrower a loan based upon their anticipated tax refend |
| Credit Application | A form requesting information about a credit applicant |
| Alternative credit | combine elements of closed and open-end closed, usually has higher interest rates, & usually have higher fees |
| Interest | price of money that is borrowed |
| Credit limi | max that can be charged on a credit card |
| Minumum payment | minimum amount on a bill that must be paid every month |
| APR | Annual Payment Rage |
| Debit Card | electronically connected to an account; apply |
| Late payment fee | when minumum isn't paid on time |
| Over the limit fee | transaction goes over the limit |
| Penalty APR | higher interest charged on new transactions |
Created by:
stevenmziray832
Popular Insurance sets