| A | B |
|---|
| APR | Annual percentage rate; the annual rate of interst that is charged for using credit |
| acceleration clause | A provision in an installment loan contract that gives the seller the right to declare the whole balance due if the buyer misses even one installment payment |
| add-on clause | A loan contract provision that allows purchases to be added to an existing installment loan, with earlier purchases used as security for later ones |
| asset | An item of value you own, including money |
| bankruptcy | Legal relief from repaying certain debts |
| balloon payment | A final loan payment that is much larger than the other installments |
| capacity | A person’s ability repay debt from regular income |
| capital | A person’s finacial resources |
| cash credit | Used to borrow money; often used to purchase goods and services from sellers who do not give credit. Types of cash crdit include installment loans, single-payment loans, and credit card or check credit limits. |
| character | A person’s reputation for honesty and financial history |
| closed-end credit | A one-time extension of credit for a specific amount and period of time |
| collateral | Property that is pledged to guarantee payment of a loan |
| collection agency | A business that collects unpaid debt for other companies or organizations |
| cosigner | A responsible person who signs a loan as a co-borrower and thereby agrees to pay the obligation if the primary borrower fails to do so |
| consumer finance company | Businesses that specialize in making small or personal loans |
| credit | The supplying of money, goods, services at present in exchange for the promise of future payment |
| credit counseling | Guidance provided by trained people who help consumers learn to live within their means |
| creditor | A person or business who supplies money, goods, or services to debtors |
| credit bureau/ credit reporting agency | An organization that keeps a running record of the financial and credit transactions of credit users and the credit worthiness of consumers. They sell information to creditors, landlords, insurers, employers, and other businesses. |
| credit history | A pattern of past behavior in regard to repaying debt |
| credit limit | The maximum amount of credit that a creditor will extend to a borrower |
| credit rating | A creditor’s evaluation of a person’s willingness and ability to pay debts as judged by character, capacity, and capital |
| credit report | A record of a particular consumer’s use of credit and account payment patterns |
| credit score | A numerical rating, based on credit report information, that represents one measure of a person’s level of credit worthiness |
| debt consolidation loan | A loan that combines all existing debt into a new loan with a more manageable payment schedule |
| default | Failure to fulfill the obligations of a loan |
| delinquent | Overdue |
| down payment | A portion of a purchase price paid by cash or check at the time of purchase, reducing the amount borrowed |
| finance charge | What the consumer pays for the use of credit, including interest charges and any other fees |
| grace period | Period of time during which the balance on a credit card may be paid in full to avoid finance charges |
| garnishment | The legal witholding of a sum from a person’s wages in order to collect a debt |
| impulse buying | Buying items that are not really needed |
| installment credit | A form of credit that may be used to purchase expensive items like cars or major appliances; the buyer makes payments in equal dollar amounts that include finance charges. |
| installment loan | A loan where you borrow a set amount of money and repay it plus finance charges in a series of scheduled payments |
| interest | A fee paid for the opportunity to use someone else’s money over a period of time |
| lien | A claim upon property to satisfy debt |
| liabilities | Amount a person owes, such as unpaid bills, credit card charges, personal loans, and taxes |
| loan shark | Unlicensed lender who operates illegally and chargse excessive interest |
| net worth | The difference between your assets and your liabilities. Expressed by the formula: assets – liabilities = net worth |
| open-end credit | Credit that can be used repeatedly. Sometimes referred to as a line of credit |
| principal | The original amount borrowed |
| regular charge account | A type of sales credit that allows customers to purchase goods and services on credit and pay the bill in full in 25-30 days. If you do this, you are not charged interest; however, you may be charged interest if you do not pay the full amount. |
| repossession | Taking away property due to failure to make loan or credit payments |
| revolving credit | A form of credit in which the total amount of the bill does not have to be paid each month; however, a finance charge will be figured on the amount not paid. |
| right of rescission | The right, provided by the Truth in Lending Act, that gives borrowers up to three business days to cancel a loan or other credit transaction for which their home is pledged as security |
| sales credit | Credit used to purchase goods and services |
| single payment loan | A loan where you borrow an amount of money and repay that amount plus finance charges in one payment |
| secured credit | Credit that is backed by a pledge of property |
| unsecured loan | Generally, a loan that only requires a signature promising to repay the loan as stated in the contract; not backed by collateral or pledge of valuables |
