Business Ch. 16
A line of credit is a preestablished amount that can be borrowed on demand, with collateral
F
A pawnbroker is an illegal business where loans are made on the value of merchandise that serves as collateral
F
A revolving credit account is a type of closed-end credit
F
Credit unions charge higher rates of interest on loans than do banks or finance companies
F
Drug stores, clothing stores, and pawnshops are all examples of retail stores
F
Finance companies take less risk and charge lower interest rates than do credit unions.
F
You generally are able to add onto a closed-end account, as long as payments are current
F
Which of the following is not an advantage of using credit?
It allows you to shop only at one store.
Closed-end credit often requires a down payment and the item being purchased serves as collateral
T
Credit unions make loans available to their members only.
T
In the 1990s, overuse of credit cards resulted in record numbers of people declaring bankruptcy.
T
It is important to establish a good credit record now so that you can get credit later, as needed.
T
Late fees for payments on credit cards can also result in higher interest rates
T
Many large retail stores allow customers to use bank credit cards as well as store credit
T
One of the most common sources of cash loans is the private lender
T
Service credit is available to almost everyone and most often does not carry finance charges but allows budget plans when needed
T
The annual percentage rate (APR) is the cost of credit, expressed as a yearly percentage
T
Today, credit is abundant and difficult to avoid.
T
Use of credit can lead to overspending.
T
Using credit ties up future income and can put strain on a family budget
T
Where no usury laws exist, finance companies charge as much interest as may be agreed upon
T
The total amount that remains due on a loan.
balance due
Property you possess that is worth more than your debts is called
capital
At which of the following will you probably get the lowest rate of interest for a consumer loan?
credit union
The interest or money that is charged a borrower for the use of credit is the
finance charge
The interest you pay for the use of credit.
finance charge
Small loan companies that charge high interest rates.
finance companies
Which of the following is not an example of service credit?
hairdresser services
A pre-established amount that can be borrowed.
line of credit
Unlicensed lenders who charge illegal rates.
loan sharks
The least amount you may pay under your credit agreement.
minimum payment
Credit that can be used again and again (as long as the balance owed does not exceed the limit) is called
open-end
A common source of cash loans when property is pledged is
pawnbrokers
Legal businesses that give loans based on the value of merchandise held as collateral.
pawnbrokers
The amount borrowed is known as the?
principal
Department stores and variety stores are examples of this type of credit source.
retail stores
A loan on which property is pledged to ensure payment.
secured loan
Laws that establish maximum interest rates.
usury laws
Which of these is a form of open-end credit?
American Express
A loan for which the borrower pledges property to ensure repayment is
a secured loan