Terms for Module 10/11/12 Quiz
Module 10
RESP-Registered Education Savings Plan which is designed to help families save for their child’s post-secondary education.
Ex: The RESP gave my child the opportunity to go to university.
Canada Education Savings Grant- government program that encourages Canadains to save for their child's post-secondary education.
Ex: The Canada Education Savings Grant was helpful due to my financial status.
Canada Learning Bond-Government program that provides financial support for post-secondary education by depositing money into a RESP.
Ex: The Canada Learning Bond is used by many families with low-income.
Depreciation-A reduction in the value of an asset over time.
Ex: There was a depreciation in the car’s value.
Appraisal-assessing something or someone
Ex: He must give people an honest appraisal of the situation.
Leasing- Financial arrangement in which someone pays to use land, a vehicle, etc. for a particular period of time.
Ex: I'm planning on leasing my new house rather than buying it.
Monthly payment-Payment made on a monthly basis.
Ex: Many people are now having a hard time making their monthly house payments.
Down-payment-partial payment made at the time of purchase, with the remaining balance to be paid later
Ex: We put a down payment on the house.
Mortgage-An agreement between you and a lender that gives them the right to take your property if you don't repay the money you've borrowed plus interest.
Ex: They took out a mortgage on a property.
Amortization period-The total length of time it takes to pay off a loan.
Ex: A mortgage with a 20-year amortization period means the loan will be fully paid off within 20 years.
‘Terms’ of the mortgage- The conditions and period of time outlined in the mortgage contract/what is included in the contract.
Ex: It is important to do your research before accepting the terms of the mortgage.
Roaming fees-fees when using your mobile phone outside your service provider's normal coverage area.
Ex: Remember to check your mobile plan's roaming fees before you travel.
Module 11
Debtor-someone who borrows money from others.
Creditor-someone who lends money to others.
Liability- something that you owe. (dept is a liability)
Asset- money that has been loaned to someone else to be paid back, like credit
Net Worth-the value of all assets, minus the total of all liabilities.
Principal-the amount you borrow.
Dividend-a sum of money paid regularly by a company to its shareholders out of its profits
Amortization-the action or process of gradually writing off the initial cost of an asset.
Interest (p. 146)-the cost you pay for using someone else’s money.
Mortgage (p. 146)-a loan taken out to buy a house or other properties.
Module 12
Capital- refers to things you do. They have value and could possibly be sold if money was needed to pay back the loan.
Character- how responsible you seem to be and how reliable you are likely to be in repayment of the loan.
Capacity-do you have enough income to pay the loan.
Credit rating- Assessment of your creditworthiness. It's a tool used by lenders to evaluate the risk associated with granting loans or credit
Collateral- something of value that you put up in support of a loan and that could be sold, chased in, or given to be the lender if a loan can’t be repaid.
Co-signer- a person who signs a loan agreement who is willing to pay back he loan, or what is owing on a loan, if the borrower can’t repay.
Consolidation loans- one loan taken out to pay off a number of debts to make one payment monthly rather than a number of payments to hopefully reduce the monthly cost.
Important concepts for short answer questions
What are some of the reasons why people tend to borrow more money today than 30-40 years ago?
People tend to borrow more money due to high costs of housing, people are spending more money from their income and are saving less.
What is the average level of household debt in Canada, not counting mortgage debt, in recent years?
The average level is $25, 000.
What is ‘credit limit’?
A credit limit is the maximum amount of money a lender will allow a borrower to spend on a credit card or line of credit.
What are ‘payday loan’ or ‘cheque cashing’ companies?
Companies that people borrow money from.
Explain ‘credit check’.
A check on your credit card rating and after that, the institution is willing to lend you the money.
What are the “3Cs?” Why are they used?
Do you have enough monthly income to pay the cost? Do you have other expenses that make it hard for you to pay? Do you have other depts? They are used to help show you credit worthiness.