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Miss Loveless Credit
Unit 4 (2nd set) credit, investment
| Question | Answer |
|---|---|
| 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
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