Vocabulary Quiz I Flashcards
(26 cards)
Credit
When something is bought that is not paid for at the time of purchase
Debtor
Organization or person who uses credit
Creditor
Organization or person who extends credit to debtors
Asset
A person property Or what is owned
Earning power
A person’s ability to earn money now and in the future
Credit rating
A numerical value that indicates how well a user of credit meets financial obligations; these records are used by creditors when they decide to issue credit
Credit reporting agency
Organizations that compile records on users of credit as to how well they repay their debts
FICO score
A score that summarizes the probability that a debtor will pay a debt and is a reliable was that creditors judge creditworthiness
Installment plan
A method of payment of a purchase or services over a period of time
Down payment
The upfront money applied to a purchase that is made using a ban (credit)
Lending institution
Organizations that extend loans, making their profits by charging interest; includes banks, savings and loans, credit unions, consumer finance companies, life insurance companies and pawnshops
Collateral
Security, as personal belonging, a car or boat title, cd, or stock certificates, that insures a loan will be repaid
Payday loan
A small loan taken over a very short period of time, usually a few weeks or less, requiring the borrower to pay back the loan in full on an upcoming payday mutually agreed upon by the borrower and lender
Deferred payment plan
Requires the borrower to make periodic payments but no interest is charged if the payments an made on time. Borrowers pay the same price for an item as if they paid for it in full at the time of purchase and they take possession of the item immediately
Layaway plan
A method for purchasing merchandise whereas the customer makes periodic payments, usually monthly, towards the purchase price of merchandise. The merchandise is held at the star (sometimes for a fee) until all payments are made
Default
Describes the situation when borrower fails to make payments according to the schedule set up when the loan originated
Promissory note
An agreement that states the conditions of a loan ; a borrower’s signature confirms a promise to pay back the loan as outlined in an agreement
Cosigner
A person that signs a promissory note along with the borrower and agrees to pay back the loan if the borrower does not
Life insurance
A type of insurance that pays a specified amount upon the policy holder’s death; a creditor often requires a borrower to take out [this] to cover the loan in the event the borrower dies before the loan is paid
Prepayment privilege
An agreement that allows a borrower to make payments before the due date to reduce the amount of interest
Prepayment penalty
An amount borrowers sometimes must pay in they wish to pay back an entire loan before the due date
Wage assignment
A voluntary deduction from an employees paychecks, used to pay off debts
Wage garnishment
An involuntary form of was assignment, often done by court order
Balloon payment
The last monthly payment on some loans that is much greate than the previous payments
