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Miss Loveless Credit

Unit 4 (2nd set) credit, investment

QuestionAnswer
What is credit? an arrangement to recieve cash, goods, or services
Define Consumer credit. the use of credit for personal needs. (it tells of consumer spending and demand)
What is the most common type of consumer credit? credit cards
What or who is a creditor? an indevisual, buisiness owner, or merchant who uses credit. (a person that lends money)
Why should it be important to have good credit? This gives you the ability to buy things people could usually not afford
What are two things creditors ask toward credit consumers? Do you have the cash you need to make the fown payment? Do you want to use your savings instead of your credit?
What will credit cards allow you to do? They will be able to combine purchases, making just one monthly payment
You will need a credit card for...? hotel payments, shopping, and buying a phone.
Lenders usually look for a....? responsible person to pay them back on time
What should you remember about credit cards? they cost money!!!
Most people recieve this feeling of power. This feeling is called....? Temptation to spend.
If you fail to pay back your lender on time thi might effect your...? credit standing
Why is it important to have a good credit standing? Lenders will trust you more with money
What will happen if you fail to repay your debt? The government might take away some of your income and property to repay your debt
What is close-ended-credit? credit as a one-time loan that you will pay back over a specified period of time in payments of equal amounts.
Define open-ended-credit. is credit as a loan with a certain limit on the amount of money you can borrow
What is line of credit? the maximum amount of money you can borrow.
what are inexpensive loans? loans with low interest (family or parents)
What should you do before taking out a loan? You must make sure you can afford it.
What should you be sure about when getting a loan? Knowing whether you will be able to pay for your usualy expenses and the monthly loan payments.
How can you find out if you can afford a loan? you add up all your monthly expenses and then subtract the total from your "take-home" pay, if the difference is not enough to make monthly payments and still have some left over, you CANNOT afford a loan.
What is monthly debt? payments that include credit card and loan payments.
What should you consider about taking out a loan? how much it costs and whether you can pay the additional monthly loan payments
What are two key factors of taking out a loan? The finance charge, and the APR (annual percentage rate)
What is finance charge? the total dollar amount you pay to use credit
What is the finance charge calculated by? the APR.
Define the APR (annual percentage rate) is the cost of credit on a yearly basis expressed as a percentage.
EX. If you have an APR of 18%, you pay $18 per years on each $100 you owe. Does that make sense? (yes) GOOD! (no?) TRY AGAIN!
What must every organization with credit do? They warn their customers about the TRUE APR.
What is the mimimum down payment? a portion of the total cost of an item that is required at time of perchase.
What is another option consumers can do with loans? Consumers can chose to take out a loan with low fixed payments, but a big final payment.
What are some lender's goals?> they try to minimize risk, or make sure that you pay back the loan full!
Define variable interest rate. a variable interest rate is based on changing rates in teh banking system (this means your interest that you pay will vary from time to time.
What is a Secure loan? you will probably recieve a lower interest rate on your loan if you pledge a collateral.
What is a collateral?> a form of security to help garantee that teh creditor will be repaid.
Define up-front-cash. many lenders believe that you have a higher stake in repaying a loan if you make a large payment.
what is a shorter-term? the shorter the period of time for which you borrow, teh smaller the chance of something that will prevent you from repaying your loans (lenders usually apporve this)
How do you assess your trade-offs? you can also compare loans and credit cards by calculating teh interest to find the cost of credit.
What is simple credit? this is the interest computed only on the principal the amount you borrow
What is capacity? a borrower's ability to make monthly loan payments
Define Capital the assets a borrower owns (car, cash) in a bank account, minus your liabilities
What is credit history? do you pay your bills on time?
What is credit rating>? an evalution of an indevisuals or buisiness's financial history & the ability to pay debts
Define credit bureaus a company that gathers information on consumers who use credit
What is a credit file? this contains your name, social stuff, address, DOB-employer position-home owner or renter status-checks returned for insuffiant funds
What happened in 1971? The U.S congress enacted the fair credit reporting act, which regulates the use of credit reports
What does this act do? ^^^ this act places limits on who can access your file, gives consumers access & lets you correct any misinformation
What will happen if you refuse to pay teh bank back for any loans or credit? the lenders won't see you as a dependable person and will be hesitant on whether to lend you money again.
Why should you keep a good credit rating (standing) lenders will see you as dependable and will trust you more! :D
What is the Fair Credit Billing Act? if you purchase a defect item & the store will not accept a return, you may tell your credit card company to stop payment.
If you have any suspicion that someone might have you card....you? close your account immediately!
Why should you keep track of your credit? to make sure that no one else has your card.
What are the steps to take back your card? 1) call the credit bureaus 2) contact teh creditors 3) File a police report
What is cosigning? a loan that means you agree to be responcible for the payments if another person fails to pay them
Created by: JenniferChan