Chapter 4

Question 1

credit that automatically renews whenever a payment is made to reduce the debt

Answer 1

Revolving Credit

Question 2

Something owned (that has value) offered as security on debt; if the debt s not repaid as agreed the item is forfited to the lender

Answer 2

Collateral

Question 3

A legal claim against (or right to own) an asset until the debt is paid

Answer 3

Lien

Question 4

An asset that increases in value over time

Answer 4

Appreciating Assets

Question 5

The increase in value of a home over time; the difference between the amount owed and what the house could be sold for

Answer 5

Equity

Question 6

Failure to repay a loan on time

Answer 6

Default

Question 7

A loan for a fixed amount of money that’s paid back in monthly instalments

Answer 7

Instalment Credit

Question 8

An asset that loses value over time, such as a car that’s worth less every year

Answer 8

Depreciating Asset

Question 9

Money loaned to another person or company

Answer 9

Debt

Question 10

A statistical score used to represent a consumers credit worthiness

Answer 10

Credit Score

Question 11

A company that collects credit rating information and makes it available to creditors

Answer 11

Credit Bureau