Unit 6 FINLIT

Depreciation

The decline in value equivalent to the price paid minus the car’s resale value

Lease

Amount due at signing that is equal to the capitalized cost while monthly payments are made over the length of the contract and at the end of the contract, the vehicle is returned

Certified Pre-Owned Car (CPO)

Vehicle that is typically 1-4 years old and comes with extended warranty and cannot have been in a major accident or had major body work

Private mortgage insurance (PMI)

Extra payment embedded within your mortgage that you must pay if you put down less than 20% as a down payment on a house

Types of mortgage

Conventional

Adjustable rate

Balloon

Government-issued loans

Reverse

Adjustable Rate Mortgages (ARMS)

Interest rate locked for 5 years. Can be adjusted once a year after 5 years

Balloon mortgage

A scheduled payment is more than twice as big as any of the previous payments

Conventional mortgage

Any mortgage loan that is not insured or guaranteed by the government

Escrow account

Consists of one part  that makes up the principal and interest

Promotional sale

 Held when consumer purchases are down

Clearance sale

Held to make room for new merchandise

Loss leader

Item that is priced below cost to get the consumer in the store and buy other items

Bank endorsement

Made by signing your name on the back of the check and can be done by anyone, whether or not the check is written to him or her

Restrictive endorsement

Made by writing “For deposit only” on the first line of the back of the check and then signing your name underneath; can only be deposited into an account in your name

Special endorsement

Used when you want to give your check to someone else, done by writing “Pay to the order of [name of person you are giving check to]”, and sign your name underneath

Overdraft fee

Fee charged when your bank allows a check to clear and your checking account dips into the negative if you do not have enough funds in your account to cover the amount written on your check

Non sufficient funds fee

Fee charged when your bank rejects the transaction because you do not have enough funds in your account to cover the amount write on your check

Overdraft protection transfer fee

Allows you to link your checking account to a savings account, credit card or, in some cases, a line of credit reserved in advance if you overdraw from your checking account. Your bank will transfer funds from the linked account to cover the check and typically charge about $10 or $12.