| A | B |
|---|
| a small loan company that specializes in lending to people who have no credit or bad credit | Finance Company |
| one benefit of using credit where a borrower can begin using the item purchased and pay for it at a later time | Float/Deferred Payment |
| the process a lender goes to take possession of a home because the borrower fails to pay the mortgage | Foreclosure |
| a court ruling that requires that money be deducted from a person’s paycheck involuntarily in order to pay a debt | Garnishment |
| the time between the date a customer is billed and the date the payment is due when no interest is charged | Grace Period |
| when businesses contact the credit bureaus to get a person’s credit report, usually when someone applies for new credit. | Inquiry |
| a plan to purchase a specific item with a set number of payments and a set interest rate | Installment Plan |
| the price paid for the use of credit, usually stated in a percentage | Interest |
| a court ruling that requires a person to pay damages to another. | judgment |
| a type of credit where a borrower puts down a small amount and the lender holds the merchandise until the borrower makes regular payments and pays off the merchandise | layaway |
| occurs when a creditor can take one or more of your personal possessions as security or in payment of a debt | lien |
| a plan where a specified beneficiary receives money upon the death of the insured | Life Insurance Policy |
| the act of selling one’s personal possessions to repay debts. | Liquidation |
| money borrowed from a lender. | Loan |
| the specified length of time for paying off a credit account. | Loan term |
| the smallest amount that a borrower can pay on an amount owed, usually associated with credit cards | Minimum payment |
| an agreement with a lender to borrow up to a maximum amount and to keep borrowing up to the maximum whenever credit is available. | Open-ended credit |
| an amount charged for setting up a loan, usually associated with home loans. | Origination fee |
| businesses that give high-interest loans based on the value of personal possessions. These businesses hold onto the possession until the borrower either pays back the loan within a specified period of time, or the loan is not repaid and the broker can sell the item. | Pawn shop/broker |
| a high interest loan where money is borrowed against a future paycheck. | Payday loan |
| amounts charged for late payments, early repayment of loans, exceeding credit limits, etc. | Penalty fees |
| this interest rate is usually 3% points higher than the federal funds rate which is set by the U.S. Federal Reserve Bank. It is often used as the basis of calculating rates for adjustable rate mortgages, credit cards, and other variable rate short term loans. | Prime Rate |
| the amount borrowed. | Principal |
| rewards offered by creditors to get borrowers to apply for credit with them. | Promotional incentives |
| a partial refund of a purchase price of an item. | Rebate |
| occurs when the collateral for a secured loan is taken back by a lender due to non-payment of the loan; usually associated with cars. | Repossession |
| accounts that allow the borrower to charge up to a limit, pay some, and continue to charge without a set ending time period. | Revolving accounts |
| a finance company that makes loans through its authorized representatives. | Sales Finance Company |
| loan that requires security in the form of collateral that can be taken if the borrower is unable to pay. | Secured loan |
| an agreement to have a service performed now and pay for it later. | Service credit |
| interest calculated only on the amount borrowed without compounding interest. | Simple interest |
| a savings plan where pre-tax money is deposited to earn interest over a period of time. | Tax sheltered annuity |
| a high interest loan based on the ownership of a vehicle where the title is pledged as security for the loan. | Title loan |
| loans made without the borrower offering any specific assets as security for the loan with lending based solely on the borrower’s credit rating. | Unsecured loans |
