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Description
Flashcards by Theresa Horstmann, updated more than 1 year ago
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Created by Theresa Horstmann
over 2 years ago
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| Question | Answer |
| 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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