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Chapter 15

Terms in this set (42)

(ARM) adjustable-rate mortgages
popular mortgage rate offered by most mortgage lenders because its adjustable
accelerated mortgages
mortgages rates that have payoffs of 15 or 20 years instead of 25 or 30
amortization schedule
supplied by many lenders, shows the amount of each payment that goes to interest and to principal
amortized
when both principal and interest rate are paid off by a sequence of periodic payments
amount financed
cash price - down payment
annual percentage rate (APR)
on installment loans, percentage rate yearly
average daily balance
he most frequent way used to calculate credit card interest
borrower
person or firm doing the borrowing
cap
thing so that rates don't go beyond some maximum number
chapter 7 bankrupticy
results in liquidation of the borrower's assets with funds going to creditors, even as other remaining debts are cancelled resulting in a "fresh s7art"
chapter 13 bankrupticy
bankrupticy that requires borrowers to enter into a repayment plan and make payments until all debt is paid
charge accounts
account with store where you can make frequent purchases from a certain store or chain of stores without having to pay cash or write a check
consolidate loans
combining loans into one lower interest loan with longer terms usually
country club billing
provides a carbon copy of all original charge receipts
credit card
plastic card that can be swiped and used as money for the time being but must be paid off later
credit limit
limiting a credit card account based on income and other factors
creditor
another word for lender
debtor
another name for a borrower
escrow accounts
also called impound accounts for people taking out a mortgage
Federal Truth-in-Lending Act
act stating that lenders must report their finance charge and their APR on installment loans
finance charges
any charges beyond the cash price of an item
fixed-rate loans
home loans with fixed, stated interest rates
installment loan
loans used for cars, boats, home improvements, furniture, and even consolidating several smaller loans into one affordable payment
itemized billing
becoming more and more common because its lower cost to credit card companies
late fees
charge on payments that are received after the due date
lender
person or firm doing the lending
loan repayment tables
amortization table sometimes referred to as this
nominal rate
similar to stated rate
open-end credit
common way of buying on credit with no fixed payments
over-the-limit fees
charge on payments when the debt exceeds the amount authorized by the issuer of the card
personal property
items that can be moved from one location to another such as an automobile or stereo
real estate
items that cannot be moved such as buildings, land, or homes
real property
very similar to real estate but deals with the property
repossessed
when a company or a lender takes an item back because the buyer fails to make payments
revolving charge account
account that may never be paid off but minimum amounts must be paid each month
Rule of 78
sometimes called the sum of the balances method, rule allows a lender to earn more of the finance charge during the early months of the loan compared to the United States Rule
Stafford loan
type of installment loan used frequently by students to borrow money
stated rate
interest rate that differs from the APR
total installment cost
deferred payment price
unearned interest
interest not earned by the lender under the Rule of 78 for a loan of 12 months
United States Rule
first method for calculating the effect of an early loan payment
variable-interest-rate loans
the same thing as ARM
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