Chapter 25 Intro to Business

charge account

A customer with a_____________at a store can use his or her credit card to buy now and pay later.

single payment

A debtor pays back a______________loan in one payment, including interest.

credit risk

A good credit rating tells other lenders that you are a responsible borrower and a good______________________.

credit ratings

Banks and other financial institutions want to lend money to people with good_____________.

Installment Loans

loans repaid in regular payments over a period of time

Credit Rating

a measure of a person's ability and willingness to pay debts on time

borrow until payday

"__________________" loans are short-term loans. The cost of this kind of loan is very high.

creditor; debtor

A_______________charges a fee to a______________for using their money, which is called interest.

pawnshop; bought

A_____________loan is based on the value of something you own that is left with a pawnbroker as security against money borrowed. Items can be____________back later.

mortgage

A___________loan is a form of an installment loan, only it is written for a long period, such as 15 to 30 years.

convenient; cash; emergency

Advantages to credit: It is________, you can shop and travel without carrying____________, you can buy items right away without saving, credit is helpful in an______________, credit can help you keep track of spending, and it contributes to economic growth.

consumers

Business often pass the cost of credit on to_________through raising the prices of their products or services.

credit

Consumers use___________to buy all kinds of goods and services.

credit union

Credit unions only lend money to_____________members and employees.

misuse; limit; credit

Disadvantages to credit: It can be easy to_________, items cost more when you use credit, using it means you have committed some of your future income to your debt, you cannot use credit after you reach your_______________, and late or missed payments lower you___________________rating.

down; savings; costs

Factors to Consider before using credit: Do you have the cash you need for the__________payment? Do you want to use your_____________ instead of credit? Can you afford the item? Could you use the credit in some better way? Could you put off buying the item for a while? What are the___________of using credit?

travel; full

Holders of_________and entertainment cards must pay the_________amount due each month and pay an annual fee. Examples include American Express® and Diners Club®.

single payment

Many farmers secure____________loans in the spring.

credit; car

Many stores provide____________for their customers. Clothing, furniture, and appliance stores as well as_________dealerships are among those that offer this to customers.

high

Payday advance services charge__________fees and interest.

Interest

a fee for borrowing money

annual

Some credit cards have_________fees, which can range from $25 to $80.

installment plans

Student loans, car loans, and home improvement loans are types of______________

rate; length; amount

The amount of interest to be paid is based on the interest_________, the___________of the loan, and the__________of the loan.

federal; highways

The__________________ government uses credit to pay for many of the services and programs it provides to its citizens. State and local governments use credit to pay for things such as____________, roads, and public facilities.

consumer; commercial

To a great extent, credit has replaced money as a means of making purchases. The two types of credit are____________credit and_______________credit.

time

Various sources of loans provide different types of loans for varying lengths of________.

collateral

With a mortgage loan, the home serves as____________.

multipurpose

______________ cards are also called bank cards because banks issue them. These cards can be used at many different businesses.

credit cards

___________________are like charge accounts, but some can be used in many different places.

consumer finance

_______________companies specialize in loans to people who might not be able to get credit elsewhere. These loans are more expensive because the risk for the lender is high.

long term

_______________loan: more than five years

payday advance

______________services offer short-term loans until payday.

single purpose

_____________cards can be used to buy goods or services only at the business that issued the card.

medium term

_____________loan: one to five years

Short term

____________loan: one year or less

Commercial Credit

a type of credit used by businesses

Consumer Credit

a type of credit used by people for personal use

Credit

an agreement to obtain money, goods, or services now in exchange for a promise to pay in the future

Charge Account

credit provided by a store or company for customers to buy its products

Debtor

someone who borrows money or uses credit

Creditor

someone who lends money or provides credit

Collateral

something of value the bank can take if a borrower does not make the required loan payments