| A | B |
|---|
| APR | Annual percentage rate; the annual rate 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 is 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 to repay debt from regular income. |
| Capital | A person's financial resources. |
| Cash Credit | Used to borrow money; often used to purchase goods and services from sellers who do not give credit. Types of cash credit 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 to 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 withholding 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 charges 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 have not have to be paid each month; however, a finance charge will be figured on the amount not paid. Additional purchases can be made even though money is owed on previous purchases. The lender typically establishes an approved credit limit to represent the maximum amount of credit available. Credit cards are usually revolving credit. |
| Right of Recission | 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. |
