EPF Unit 5

closed-end loans

These are a type of loan where the borrower receives a lump sum of money from the lender and repays the loan in fixed installments over a set period of time. The borrower cannot access additional funds beyond the original loan amount, and once the loan is fully repaid, the account is closed.

open-end credit

credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services

home loan

a loan offered by banks used to pay for a home

bank

A for-profit institution that offers personal loans, mortgages, and other services.

credit union

A nonprofit financial institution that is owned by its members and organized for their benefit.

online lenders

These types of lenders are financial institutions that offer loans and other financial products exclusively over the internet, without the need for in-person interactions or visits to a physical branch.. They typically have more relaxed eligibility requirements and may offer loans to borrowers with less-than-perfect credit. They may charge higher interest rates than traditional lenders, but may also offer faster approval times and more flexible repayment terms.

credit card

a small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit.

pawnbroker

a legal business that makes high-interest loans based on the value of personal possessions pledged as collateral

private lenders

Individuals who invest their savings in real estate loans either by directly granting loans to borrowers or by turning to mortgage brokers who find borrowers for the private lender.

consumer credit

a type of credit granted by retailers that is used by individuals or families for satisfaction of their own wants

USDA home loan

home loans program offers mortgages to low-income residents of rural areas who cannot otherwise obtain a conventional mortgage.

FHA home loan

a home mortgage that is insured by the government and issued by a bank or other lender that is approved by the agency. Require a lower minimum down payment than many conventional loans, and applicants may have lower credit scores than is usually required.

payday loans advantages

These are short-term loans that are typically offered to borrowers with low credit scores and limited income. They often have very high interest rates and fees, and can trap borrowers in a cycle of debt if not paid back on time. These are usually small, ranging from a few hundred dollars up to a few thousand dollars. In many cases, borrowers are required to provide a post-dated check or authorize an electronic debit from their bank account as collateral for the loan.

annual percentage rate

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.

peer to peer loans

These platforms connect individual investors directly with borrowers. They may offer lower interest rates than traditional lenders, but may also have stricter eligibility require. This is a form of lending that allows individuals to borrow and lend money directly to each other, without the involvement of traditional financial institutions such as banks or credit unions.

credit score

A measure of an individual's credit risk; calculated from a credit report using a standardized formula

FICO score

A credit rating developed by Fair Isaac & Company in the late 1950s, now widely used by lenders and employers. It consists of digit numbers ranging from 300-850.

5 factors for credit score

payment history 35%,
amounts owed 30%,
length of history 15%,
New credit 10%
Credit mix 10%

debt management

refers to the strategies and techniques individuals use to manage and pay off their debts effectively.

credit worthiness

is a measure of an individual's ability to repay their debts based on their credit history, income, and other financial factors.

repayment plan

Plan to pay off debt

interest rate

Percentage of amount borrowed to be added to the amount loaned and paid back

loan default

Failure to pay a loan according to the agreed upon terms

foreclosure

Process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract

life insurance

insurance that pays out a sum of money either on the death of the insured person or after a set period.

term life insurance

Life insurance that pays a death benefit if the policyholder dies within a specific time period but has no remaining value at the end of this time.

whole life insurance

Insurance that is kept in force for a person's entire life and pays a benefit upon the person's death, whenever that may be.

medical bills/expenses

Bill that are from medical treatments

disability insurance

A type of insurance paid to an individual if he/she is injured and is unable to work for a specified length of time.

long-term care insurance

Insurance coverage that provides a daily monetary benefit to people who are chronically ill and who require living assistance either at home or in a residential facility

estate planning

preparing a plan for transferring property during one's lifetime and at one's death

investment strategy

A plan that examines potential returns and rates investments according to desirability

dividend investing

Investing in a company that pays out high dividends to its investors, usually on a quarterly basis.

value investing

The strategy of selecting stocks that trade for less than their intrinsic values.

real estate investment

Purchasing properties as an investment to gain profit

cost of living

The average cost of basic necessities, such as housing and food

inflation

a general increase in prices and fall in the purchasing value of money.

bankruptcy

the legal proceeding by which a bankrupt person's assets are distributed among those to whom he or she owes debts

life goals

Can include Education, Family, Career, Lifestyle, Home, Transportation, Vacations, Retirement

volunteer service

Selflessness; the difference between "giving" and "taking"

non-profit organizations

businesses which provide goods and services to businesses and individuals, but operate on donations, volunteers and philanthropists rather than profit