managing your personal finances

the total amount that remains due on a loan

balance due

the person who borrows money or uses it is the creditor lender borrower merchant

borrower

a preestablished amount that can be borrowed

capital

property you possess that is worth more than your debts is called collateral capital principle interest

capital

at which of the following will you probably get the lowest rate of interest for a consumer loan? commercial bank finance company credit union pawnbroker

credit union

person to whom one owes money of goods

creditor

a line of credit is a pre-established amount that can be borrowed on demand, with collateral

false

a pawnbroker is an illegal business where loans are made on the value of merchandise that serves as collateral

false

credit unions charge higher rates of interest on loans than do banks or finance companies

false

drug stores, clothing stores, and pawnshops are all examples of retail stores

false

finance companies take less risk and charge lower interest rates than do credit unions

false

in a regular charge account, when you pay the balance in full, a finance charge is computed in the regular monthly payment

false

you generally are able to add onto a closed-end account, as long as payments are current

false

the interest or money that is charged a borrower for the use of credit is the finance charge collateral proration all of these

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? office visits to a doctor dry cleaning services hairdresser services repair services

hairdresser services

which of the following is not an advantage of using credit? it allows you to shop only at one store it is convenient it is safer than carrying larges sums of cash it is useful in emergency situation

it allows you to shop at only one store

unlicensed lenders who charge illegal rate

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 installment open end closed end contract

open end

a common source of cash loans is when property is pledged is private lenders pawnbrokers life insurance policies loan sharks

pawnbrokers

legal businesses that give loans based on the value of merchandise held as collateral

pawnbrokers

the amount borrowed is known as the credit interest capital principle

principle

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

a loan for which the borrower pledges property to ensure repayment is an installment purchase agreement a secured loan a prorated loan a contract

a secured loan

which of these is a form of open-end credit? amercian express car loan installment loan bank loan

american express

a revolving credit account is a type of closed-end credit

true

closed-end credit often requires a down payment and the item being purchased serves as collateral

true

credit unions make loans available to their members only

true

in the 1990's, overuse of credit cards resulted in record numbers of people declaring bankruptcy

true

it is important to establish a good credit record now so that you can get credit later, as needed

true

late fees for payments on credit cards can also result in higher interest rates

true

many large retail stores allow customers to use bank credit cards as well as store credit

true

one of the most common sources of cash loans is the private lender

true

service credit is available to almost everyone and most often does not carry finance charges but allows budget plans when needed

true

the annual percentage rate (APR) is the cost of credit, expressed as a yearly percentage

true

today, credit is abundant and difficult to avoid

true

use of credit can lead to overspending

true

using credit ties up future income and can put strain on a family budget

true

where no usury laws exist, finance companies charge as much interest as may be agreed upon

true