Credit Flashcards
(35 cards)
Creditor
The business or organisation that extends the credit
Principal
The original amount borrowed
Secured credit
Backed by a pledge of property
Collateral
The property that is pledged to guarantee repayment
Closed-end credit
A one time extension of credit for a specific amount and time period
Open-end credit
Line of credit that can be used repeatedly
Instalment
A set portion of the loan amount that the borrower must pay at regularly scheduled intervals
Finance charge
The cost of using credit including interest and fees
3 C’s of credit
Character: reputation
Capital: items owned or assets
Capacity: a persons earning power
Credit history
Pattern of past behaviour in regard to repaying debt
Credit bureau
Credit reporting agency, gathers info about the creditworthiness of the customers
Credit report
A record of a particular consumers transactions and payment
Credit rating
An evaluation of a consumers credit history
Credit score
A numerical rating, based on credit report info.
Consigner
A person with a strong established credit history who signs the credit application and contract along with borrower
APR
Annual percentage rate
Grace period
Period of time during which the balance may be payed in full to avoid charges
Credit limit
The max. amount of credit that the creditor will extend to the borrower
Consumer finance companies
Businesses that specialise in making small to personal loans
Loan shark
Unlicensed lenders who operate illegally and charge excessive interest
Down payment
A portion of a purchase price paid by cash or check at the time of purchase
Balloon payment
A final payment that is much larger than the other instalments
Acceleration clause
Gives the seller the right to declare the whole balance due if the buyer misses even one instalment payment
Add on clause
Allows additional purchases to be added to an instalment contract
