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Credit, Debt, Loans
| Question | Answer |
|---|---|
| Down payment | upfront payment you make when buying something on credit (like a car or home). It reduces the amount you need to borrow |
| Maturity value | The total amount that will be paid back at the end of a loan term, including the principal and all interest |
| Interest Rate | The cost of borrowing the principal only |
| Principal | The original amount of money borrowed before interest is added. |
| APR (annual % rate) | The interest rate plus lender fees and other costs, expressed as a yearly percentage. APR gives a more accurate picture of the loan’s true cost |
| Lease | A contract that lets you use a vehicle for a set period of time while making monthly payments, but you do not own it unless you choose to buy it at the end |
| Financing | Borrowing money (usually through a bank or dealership) to purchase a vehicle and paying it back over time with interest |
| MSRP | Manufacturer’s Suggested Retail Price — the price the car manufacturer recommends the dealer charge for the vehicle. |
| Min down payment for homes | 5% |
| Conventional mortgage | A home loan that is not insured or guaranteed by the federal government |
| Adjustable Rate Mortgage (ARM) | A mortgage where the interest rate can change periodically based on market conditions, causing payments to go up or down. |
| PMI (Private Mortgage Insurance) | Insurance required on some loans (usually when the down payment is less than 20%) that protects the lender if the borrower stops making payments |
| Equity | The portion of the home you truly own. It equals the home’s market value minus what you still owe on the mortgage. |
| Escrow | An account where money is held by a third party (often your lender) to pay property taxes and homeowners insurance on your behalf. |
| Refinancing | Replacing your current loan with a new one—usually to get a lower interest rate, lower payment, or different loan terms. |
| LTV (Loan-to-Value) | A ratio comparing the amount of your loan to the market value of the home. Example: Borrowing $180,000 on a $200,000 home = 90% LTV. rest (20k)is from YOUR down payment |
| Assessed Value | The dollar value assigned to a property by a local government for tax purposes. It may differ from market value. |
| Grants | Financial aid that does not need to be repaid, typically based on financial need |
| Work Study | A federal program that provides part-time jobs to students with financial need to help pay education expenses. |
| FAFSA | Free Application for Federal Student Aid — the form students complete to determine eligibility for federal financial aid. |
| Subsidized Loans | Federal student loans where the government pays the interest while the student is in school at least half-time. |
| Unsubsidized Loans | Federal student loans where interest begins accruing immediately, and the borrower is responsible for all interest. |
| Direct PLUS Loans | Federal loans available to graduate students or parents of dependent undergraduate students to help cover remaining education costs. |
| Master Promissory Note (MPN) | A legal document in which the borrower agrees to repay their student loans and any accrued interest and fees. |
| Loan Servicer | A company assigned to handle billing, payments, and customer service for your student loan. |
| Credit Limit | how much they will let you borrow on the card (capacity) |
| Current or Statement Balance | amount of money in full you pay back |
| Annual fee | cost to own card (shouldn't use a card that has one, many are free) |
| Purchase APR | all purchases connected to this |
| Variable APR | changes with market |
| Use __% of credit limit | 30% |
| Calculate credit score | Payment history, available credit, credit history |
| Penalty APR | applied to you when bills not paid on time, highest rate they could possibly charge you |
| Introductory APR | temporary, low, or 0% interest rate offered on new credit cards on purchases & balance transferS |
| Return Payment Fee | penalty charged by banks or creditors when a payment is declined due to insufficient funds, a closed account, or other issues |
| Over-the-Credit Limit Fee | penalty charged by credit card issuers when your balance exceeds your approved credit limit |
| Foreign transaction fee | surcharge added by banks on purchases made outside the U.S. or in foreign currencies. These fees apply to credit/debit card, ATM, and online transactions |
Created by:
user-2024036