Personal Finance Chapters 5-7
Installment cash credit
Direct loan of money for personal purposes home improvement or vacation expenses. You make a down payment and make payments in specified amounts over a set period.
Expensive loans
Easiest loan to obtain. Finance compinaies and retail stores that lend to customers will frequently charge higher rates (12-25%). Banks also lend money to their credit card holders through cash advances - loans that are billed to a customers credit card account
Consumer Credit
The use of credit for personal needs (except a home mortgage).
inexpensive loans
loans with low interest usually by family
medium priced loans
loans with moderate interest from commercial banks, savings and loan associations, and credit unions. Credit unions provide good personalized service and are patient with borrowers
legal aid society
one of a network of publicly supported community law offices that provide legal assistance to consumers who can't afford an attorney
points
prepaid interest charged by the lender
zoning laws
restrictions on how the property in an area can be used
Fair credit billing act
sets procedures for promptly correcting billing mistakes, refusing to make credit card payments on defective goods, and promptly crediting payments
mediation
the attempt by an impartial third party to resolve a difference between two parties through discussion and negotiations
line of credit
the dollar amount, which may or may not be borrowed, that the lender makes available to a borrower
Apr
the percentage costs of creation a yearly basis. true rate of interest
amortization
the reduction a loan balance through payments made over a period of time
arbitration
the settlement of a difference by a third party whose decision is legally binding
finance charge
the total dollar amount paid to use credit
simple interest rates
interest computed on principal only and without compounding
Open end credit
A line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment.
five c's of credit
Character- what kind of person they are lending to Capacity- your ability to pay additional debt Capital- the amount of your assets that exceed your liabilities Collateral- to secure loan Conditions- anything that can affect your ability to repay a loan
escrow account
Money , usually deposited with the lending financial institution for the payment of property takes and home owner's insurance
closed end credit
One time loans that the borrower pays back in a specified period of time and in payments of equal amounts Ex. loans. installment sales credit, installment cash credit, and single lump sum credit
because any forecasts or evaluation of the economy includes consumer spending trends and consumer credit as a sustaining force
Why is consumer credit important to our economy
small claims court
a court that settles legal differences involving amounts below a set limit and employs a process in which the litigants do not use a lawyer
deed
a document that transfers ownership of property from one party to another
cooperative housing
a form of housing in which a building containing a number of housing units is owned by a non profit organization whose members rent the units
adjustable rate mortgage
a home loan with an interest rate that can change during the mortgage term due to changes in market interest rates also called flexible rate mortgage, or a variable rate mortgage
class action suit
a legal acton taken by a few individuals on behalf of all the people who have suffered the same alleged injustice
lease
a legal document that defines the conditions of a rental agreement
single lump sum credit
a loan that must be repaid in total on a specific day usually within 30 to 90 days
interest
a periodic charge for the use of credit
revolving check credit
a prearranged loan from a bank for specified amount; also called a bank line of credit.
earnest money
a proportion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer
warranty
a written guarantee from the manufacturer or distributor of a product
service contract
an agreement between a business and a consumer to cover the repair costs of a product
Credit
an arrangement to receive cash, goods, or services now and pay for them in the future
appraisal
an estimate of the current value of a property
condominium
an individually owned housing unit in a building with several such units
Home equity loan
based on home equity - the difference between the current market value and the amount you still owe on your mortgage
closing costs
fees and charges paid when a real estate transaction is completed also known as settlement costs
title insurance
insurance that, during the mortgage term, protects the owner or lender against financial loss resulting from future defects in the title and from other unforeseen property claims not excluded by the policy