⬛ CH 11 Consumer Economics ⬛

Credit

supplying of money, goods, or services

Creditor

business of organization that extends the credit

Prinicpal

original amount borrowed

Secured Credit

backed by a pledge of property

Collateral

property pledged to guarantee repayment

Closed-end Credit

one-time extension of credit

Open-end Credit

credit used repeatedly

Installment

set portion of a loan amount that the borrower must pay

Finance Charge

cost of using credit

Credit History

pattern of past behavior from repaying debt 

Credit Bureau

firm that collects information about the creditworthiness of consumers

Credit Report

record of a consumer’s transactions and payment patterns

Credit Rating

evaluation of a consumer’s credit history

Credit Score

numerical rating based on credit report information

Cosigner

someone with a strong established credit history who signs a credit application

APR

annual rate of interest that is charged for using credit

Grace Period

period of time where the balance may be paid in full to avoid finance charges

Credit Limit

maximum amount of credit that the creditor will extend to the borrower

Consumer Finance Companies

businesses that specialize in making small, personal loans

Loan Sharks

unlicensed lenders who operate illegally and charge excessive interest

Down Payment

portion of purchase price paid at the time of purchase

Balloon Payment

largest, final payment

Acceleration Cause

seller has the right to declare the whole balance due

Add-on Clause

allows additional purchases to be added to an installment contract

Right of Rescission

notice of cancellation must be given in writing

Delinquent

overdue payments

Default

failure to fulfill the obligations of a loan

Repossession

taking away property due to failure to make loan or credit payments

Collection Agency

business that collects unpaid debt for others

Lien

claim upon property to satisfy a debt

Garnishment

legal withholding of a specified sum

Credit Counseling

guidance provided by trained people who help consumers learn to live within their means

Debt Consolidation Loan

combination of all existing debt into a new loan

Bankruptcy

legal relief from repaying certain debts