Finance 3

Annual Percentage Rate (APR) – The yearly cost of borrowing money, expressed as a percentage, including interest and fees.

Capacity – A borrower's ability to repay a loan based on income, employment, and financial stability.

Capital – The financial assets or resources a borrower has, including savings and investments, which can be used to repay a loan.

Character – A lender's assessment of a borrower's creditworthiness based on credit history and reputation.

Closed-End Credit – A type of loan that must be repaid in full by a specific date with fixed payments (e.g., car loans, mortgages).

Collateral – An asset pledged as security for a loan that the lender can seize if the borrower defaults.

Conditions – Factors affecting a loan approval, including economic conditions, industry trends, and the loan’s purpose.

Consumer Credit – Credit extended to individuals for personal, family, or household purposes rather than business use.

Credit – The ability to borrow money or access goods and services with the agreement to repay later.

Fair Credit Billing Act (FCBA) – A U.S. law that protects consumers from unfair billing practices and allows them to dispute credit card charges.

Finance Charge – The total cost of borrowing, including interest and fees.

Interest – The cost of borrowing money, typically expressed as a percentage of the loan amount.

Line of Credit – A flexible borrowing arrangement where a lender sets a maximum loan amount, and the borrower can withdraw funds as needed.

Mobile Commerce – Buying and selling goods or services through mobile devices like smartphones and tablets.

Open-End Credit – A revolving credit arrangement where borrowers can repeatedly access funds up to a set limit (e.g., credit cards).

Revolving Check Credit – A type of open-end credit that allows borrowers to write checks up to a predetermined credit limit.

Simple Interest – Interest calculated only on the principal amount of a loan, not on accumulated interest.