Consumer Loans Terms & Definitions | Standard 10 Economics

Acknowledgment Clause

the portion of a legal contract signed by both parties

Amenities

things that help provide convenience, comfort, or enjoyment

Annual percentage rate (APR)

Interest rate charges on personal loans that include the actual cost associated with the loan

Collateral

The assets that have been pledged against loan repayment

Cosigner

Someone who agrees to sign the loan document and to repay the loan if the original borrower stops making payments

Cost of Living

the average cost of the basic goods and services needed to sustain a certain standard of living

Defaults

When the borrower stops making the loan payments

Down payment

The portion of the purchase price that the buyer is required to pay

Federal Perkins loans

Loans for students with "exceptional" financial need

Federal Stafford loans

The most common type of federal education loans

Fixed rate mortgage

The interest rate remains the same for the life of the loan.

Adjustable rate mortgage (ARM)

An interest rate that may go up or down over time

Home equity loan

Allows a homeowner to borrow against the equity in the home—that is, the difference between the home's value and the amount owed to a lender

House Poor

when someone spends so much of their income on the costs of homeownership that they struggle to reach other financial goals

Lease

Essentially a long term rental agreement

Leasing Contract

a legal contract that allows the renter, or lessee, rights to the use of a property owned or managed by the lessor for a period of time

Legal Contract

an agreement made between two or more parties that is enforced by law​​​​​​​

Liability coverage

Insurance that covers you against any damage you do to other people or their property

Line of credit

An agreement to allow borrowing as needed up to a certain amount of money

Maturity date

The date at which the loan will be completely repaid

Mortgage

The common term for the type of loan people take to obtain a home

Mortgage Principal

the amount borrowed (that has to be paid back) to purchase a home

Personal loans

Type of credit that is typically started at the time of purchase for a specific asset (car, boat, etc)

Policy riders

Additional insurance coverage to cover things such as jewelry or valuable heirlooms that are often not fully covered by a typical insurance policy

Private Mortgage Insurance (PMI)

insurance that protects lenders against loss if the borrower defaults on the loan; does not go toward paying down your mortgage at all​​​​​​​

Secured loan

A loan that has some asset pledged against the loan, so the lender is assured of winding up with some valuable asset if the borrower fails to pay off the loan

Standard of Living

the level of wealth, comfort, material goods, and necessities available to a group of people​​​​​​​

Subprime mortgages

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

Teaser rate

An extremely low interest rate for a short period of time that is used as a deal sweetener

Unsecured loans

Loans that have no collateral pledged against the loan

Subsidized Loans

student loan based on financial need and only acquires interest after leaving school

Unsubsidized Loans

student loan whos interest starts as soon as loan is given