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Description
Flashcards by DANIEL OLDHAM, updated 4 months ago
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Created by DANIEL OLDHAM
4 months ago
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| Question | Answer |
| Amortization | Process of paying back a loan (principal + interest) by equal periodic payments. |
| Amount financed | Cash price - down payment. |
| Annual percentage rate (APR) | True or effective annual interest rate charged by sellers. Required to be stated by Truth in Lending Act. |
| Average daily balance | Sum of daily balances ÷ number of days in billing cycle. |
| Cash advance | Money borrowed by the holder of a credit card. It is recorded as another purchase and is used in the calculation of the average daily balance. |
| Daily balance | Calculated to determine customer's finance charge: previous balance + any cash advantage + purchases - payments |
| Deferred payment price | Total of all monthly payments + down payment. |
| Down payment | Amount of initial cash payment made when an item is purchased. |
| Fair Credit and Charge Card Disclosure Act of 1988 | Act that tightens controls on credit and companies soliciting new business. |
| Finance charge | Total Payments - actual loan cost. |
| Installment loan | Loan paid off with a series of equal periodic payments. |
| Loan amortization table | Table used to calculate monthly payments. |
| Open-end credit | Set payment period. Also, additional credit amounts can be added up to a set limit. It is a revolving charge account. |
| Outstanding balance | Amount left to be paid on a loan. |
| Revolving charge account | Charges for a customer are allowed up to a specific maximum, a minimum monthly payment is required, and interest is charged on the outstanding balance. |
| Truth in Lending Act | Federal Law that requires sellers to inform buyers, in writing of 1. the finance charge and 2. the annual percentage rate. The law does not dictate what can be charged. |
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