Chapter 14 Key terms

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Key terms for Chapter 14: Installment Buying
BRANDI MCCAMMON
Flashcards by BRANDI MCCAMMON, updated about 1 month ago
BRANDI MCCAMMON
Created by BRANDI MCCAMMON about 1 month 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
Daily balance Calculated to determine customer's finance charge: previous balance + Any cash advances + 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 Card Disclosure Act of 1988 Act that tightens controls on credit card companies soliciting new business
Finance charge Total payments- loan cost
Installment loan Down payment +( number of payments x Monthly payment). also called deferred payment
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 account Charges for a customer are allowed up to a specified maximum, a minimum monthly payment is required, and interest is charged on balance
Truth in Lending Act Federal law that requires sellers to inform buyers, in writing, of the finance charge and the annual percentage rate. The law doesn't dictate what can be charged
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