Chapter 16 Credit in America
One of the earliest forms of credit was the ______ at the local general store.
Account
A loan for a specific amount that must be repaid in full, including finance charges, by a stated due date, is called _________credit
Closed end
A loan on which the goods purchased with the loan serve as ________ is a type of secured loan
Collateral
Something of value that can be sold to pay a debt is often referred to as_________
Collateral
paying at a future date for the present use of goods and services or money is called_________
Credit
One who lends money or the use of goods and services for payment at a later date is known as a ___________
Creditor
(T/F) Affinity cards charge higher interest rates than regular bank credit cards.
F
(T/F) Department stores, drug stores, and finance companies are all examples of retail outlets.
F
(T/F) Interest rates on loans are usually higher at credit unions than they are at banks.
F
Small loan companies, also called _______, charge higher interest rate and take more risk
Finance companies
The free period, also called________, allows you to avoid a finance charge if you pay in full before the due date
Grace Period
A __________ is a pre-established amount that can be borrowed on demand
Line of credit
_______ is credit whereby you can add purchases up to a set credit limit
Open ended credit
Business called ___________ stores offer goods and services directly to consumers and include department stores, drugstores, and clothing stores
Retail
Almost everyone uses ________ credit, which involves having work performed and paying for it later
Service
(T/F) A debtor is a person who borrows money from others.
T
(T/F) A line of credit is a preestablished amount you can borrow without a new loan application.
T
(T/F) Credit has helped the American economy to grow at a healthy pace.
T
(T/F) In an installment purchase agreement, the item you are purchasing will serve as the collateral.
T
(T/F) Most disadvantages of credit can be eliminated by wise use of credit.
T
(T/F) The Truth-in-Lending law requires all lenders to calculate APR the same way.
T
(T/F) Where no usury law exists, financial institutions may charge whatever rate of interest is agreed upon.
T
In some states, maximum interest rates are set by __________ laws
Usury
A __________ is money borrowed against the credit card limit
cash advance
Pawnbrokers sell merchandise you have pawned, called ______, if you do not repay the loan plus interest by a specified date.
collateral
A service to customers called ________ allows you to charge now and not be billed for several months
deferred billing
The interest you paid for the use of credit is called a ____________
finance charge
________ are unlicensed lenders who charge it legal interest rates
loan sharks
What is not true about an installment purchase agreement?
new purchases may be added on
A _______ is a legal business where loans are made based on the value of merchandise use as a collateral
pawn broker
Credit cards such as VISA and MasterCard are examples of
revolving credit agreements
A manufacturer related company, called a, makes loans through authorized representatives
sales finance company
GMAC Financial Services is an example of a
sales finance company
What is an example of service credit?
telephone bill
Finance companies charge higher rates of interest on loans because
they take more risk