Credit and Loans Vocabulary

Flashcards based on lecture notes about credit and loans.

Repossess

Retake possession of (something) when a buyer defaults on payments.

Collateral

An asset a borrower pledges to a lender as security for a loan.

Annual Percentage Rate

Determines the cost of credit on a yearly basis.

Cash Advance

A loan given in cash by a credit card company in anticipation of the borrower being able to repay it.

Cosigner

Someone who agrees to be responsible for a debt if the main applicant does not repay it.

Grace Period

An amount of time allowed to repay a debt without having to pay interest charges.

Credit Limit

The maximum amount a card holder can charge on a credit card.

Variable Rate

An interest rate that fluctuates or changes over the life of the loan.

Fixed Rate

Interest rate always remains the same.

Down Payment

A portion of the total cost that is paid when a product or service is purchased.

Principal

The amount of borrowed money that is still owed and on which interest is based.

Finance Charge

The total amount it costs the borrower to have the lender finance the loan.

Secured Loan

The loan is backed by collateral.

Unsecured Loan

A loan that is not backed by collateral.

Garnishment of Wages

Credit card companies obtain a court order to take all or part of a debtor's paycheck if he or she stops making payments.

Credit

An agreement to obtain money, goods, or services now in exchange for a promise to pay in the future.

Creditor

Lends money or provides credit.

Debtor

Borrows money or uses credit.

Interest

Creditors charge a fee for using their money.

Consumer Credit

The type of credit used by people for personal reasons.

Commercial Credit

Credit used by businesses.

Credit Rating

A measure of a person’s ability and willingness to pay debts on time.

Charge Account

Credit provided by a store or company for customers to buy its products.

Installment Loans

Student loans, car loans, and home improvement loans are types of these loans.