Accounting Chapter 5
Annual Percentage Rate (APR)
The percentage cost of credit on a yearly basis. The APR yields a true rate of interest for comparisons with other sources of credit
Finance Charge
The total dollar amount paid to use credit
Consumer Credit
The use of credit for personal needs ( except a home mortgage)
Open-End Credit
A line of credit in which loans are made on a conscious basis and the borrower is billed periodically for at least partial payment
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
Colleratol
A valuable asses that is pledged to ensure loan payments
Credit
An arrangement to receive cash, goods, or services now and pay for them in the future.
Simple Interest
Interest computed on principal only and without compounding
Closed-End Credit
One-time loans that borrower pays back in a specified period of time and in payments of equal amounts
Fair Credit Billing Act (FCBA)
Sets procedures for promptly correcting billing mistakes, refusing to make credit card payments on a defective goods, and promptly crediting payments
Mobile Commerce
The ability to purchase using a mobile device
Character
The borrower attitude towards his or her credit obligations
Capital
The borrowers assets or net worth
Capacity
The borrowers financial ability to meet credit obligations
Line of Credit
The dollar amount, which may or may not be borrowed, that a lender makes available to a borrower
Conditions
The general economic conditions that can affect the borrows ability to repay a loan