Chapter 14 Key Terms

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Chapter 14 discusses the installment buying process such as the cost of installment buying and the revolving charge credit cards.
Theresa Horstmann
Fichas por Theresa Horstmann, actualizado hace más de 1 año
Theresa Horstmann
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Amortization Process of paying back a loan (principal plus interest) by equal periodic payments.
Amount Financed Cash price less down payment
Annual Percentage rate (APR) True or effective annual interest rate charged by sellers. Required to be stated by Truth in Lending Act.
Average Daily Balance Sum of daily balances divided by number of days in billing cycle.
Cash Advance Money borrowed by holder of credit card. It is recorded as another purchase and is used in the calculation of the average daily balance.
Credit Card Act A federal statute passed in 2009 to provide fair and transparent practices to the extension of credit.
Daily Balance Calculated to determine customer's finance charge: previous balance + any cash advantage + purchases - payments
Deferred Payment Price Total of all monthly payments plus down payment.
Down Payment Amount of initial cash payment made when item is purchased.
Fair Credit and Charge disclosure Act of 1988 Act that tightens controls on credit and companies soliciting new business.
Finance Charge Total Payments - Actual loan cost
Installment Loan Loan paid off with a series of equal periodic payments.
Loan Amortization Table Table used to calculate monthly payments.
Open-end Credit Set payment period. Also, additional credit amounts can be added up to a set limit. It is a revolving charge account.
Outstanding Balance Amount left to be paid on a loan.
Revolving Charge Amount Charges for a customer are allowed up to a specific maximum, a minimum monthly payment is required, and interest is charged on balance outstanding.
Truth in Lending Act Federal Law that requires sellers to inform buyers, in writing of (1) the finance charge and (2) the annual percentage rage. The law does not dictate what can be charged.
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