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