Personal Finance: Loans and Housing Decisions

These flashcards cover key concepts from the lecture on personal finance, loans, and housing decisions.

Alternative Financial System

A collection of lending sources that typically do not rely on an individual’s credit report, including payday lenders and pawn shops.

Payday Loans

Short-term loans designed to be repaid within a few weeks when the borrower receives a paycheck.

Truth in Lending Act (TILA)

A federal law that protects consumers by requiring disclosure of loan terms, costs, and other important conditions.

Secured Loan

A loan that is backed by collateral, meaning the lender has rights to the asset in case of default.

Unsecured Loan

A loan that is not backed by any collateral; based solely on the borrower's creditworthiness.

Installment Credit

A type of credit where the borrower receives the full amount of the loan upfront and pays it back in fixed payments over time.

Line of Credit

A flexible loan from a financial institution that allows the borrower to draw funds as needed and pay interest only on the amount borrowed.

Deposit Advance

A short-term loan that is automatically repaid with the next qualifying electronic deposit.

Peer-to-Peer Lending (P2P)

A method of borrowing and lending money online where individuals lend to others directly without traditional financial institutions.

Federal Student Loans

Loans for students that generally do not require a credit check and can be used to cover tuition and living expenses.

Grace Period

A time frame after graduation or dropping below half-time status during which borrowers are not required to make loan payments.

529 Plan

A tax-favored college savings plan that allows for investment in mutual funds and other products to save for educational expenses.

Coverdell Educational Savings Account (CESA)

An educational savings account allowing tax-free withdrawals if used for qualified educational expenses, with contribution limits.

Federal Pell Grant

A need-based federal grant provided to low-income undergraduate students to help finance their education.

TEACH Grant

A federal grant for students who plan to teach in low-income schools or high-demand subject areas.