Consumers education chapters 9-11

Credit Limit (pg. 157):

The maximum amount of credit that a lender extends to a borrower, which can vary based on several factors including credit score, income, and repayment history.

Equal Credit Opportunity Act (pg. 158):

Allows consumers to borrow up to some present maximum amount LIKE A CREDIT CARD

Pretexting/Phishing (pg. 165): a poser accesses your personal info

 a poser accesses your personal info

Q: Where does Phishing take place? (pg. 165)

online

Down Payment (pg. 176):

when a purchase requires a portion of the purchase price to be paid by the buyer’s own money

What are two examples of “things” you can put a down payment on?:

cars and house

Cosigner (pg. 177):

someone who agrees to sign the loan document and repay the loan if the other individual stops making payments

Q: Why do you think the book warns you about cosigning for family or friends?

because if you are a cosigner then you need to understand that you might have to make large payments

Secured Loan (pg. 178):

Contains some asset pledged against the loan so the lender is assured of windi9ng up with some valuable assets if the borrower fails to pay off the loan

Collateral (pg. 179):

assets that have been pledged against the loan payment

Q: What are at least two (2) examples of collateral?

A: car and bike

Defaulting (pg. 179):

payments being stopped

Q: What happens to Kayce’s bike after her father defaults on the loan?

It will get taken away and auctioned off

Unsecured Loan (pg. 179):

contain no collateral pledged agains thte loan

Subprime Mortgage (pg. 180):

higher interest rate mortgage loans made to people with poor credit scores

Q: How did these affect you and your family, as taxpayers, during the 2008 financial crisis? (pg. 180)

people couldn’t make payments so they lost their money

Home Equity Loan (pg. 181)

: allows a homeowner to borrow against the equity in his or her home

Q: Why might you want to be cautious about getting this type of loan? (pg. 181)

A: if you can’t pay you could lose your house

Subsidized Stafford Loans (pg. 185)

loans given based on needs

Q: What is a “perk” of a subsidized Stafford loan? (pg. 187)

A: interest charged don’t build up while they are in school

Unsubsidized Stafford Loans (pg. 185):

: non-need based qualification system

Q: What is the downside of an Unsubsidized Stafford loan? (pg. 187)

A: interest rates build up while the student is in school

Leasing A Car (pg. 187):

long term rental agreement on a car

Cash Advance (pg. 206):

ability to use your card to get cash instead of just services and goods

Q: How do credit card companies make money? (See diagram on pg. 207)

they get a percent of every purchase you make

Debt Consolidation (pg. 210):

taking out a large loan to cover smaller debts

Q: What is a risk with Debt Consolidation (pg. 210)

A: people pay off their credit card debt with home equity loan, which lends to high credit card balences

Bankruptcy (pg. 210):

the courts provide protection to a person who is unable to pay off his or her debt

Payday Lending (pg. 211):

A lender who provides cash advances at a high cost to customers in exchange for one of their checks dated for some time in the future