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Description
Flashcards by BRANDI MCCAMMON, updated 3 months ago
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Created by BRANDI MCCAMMON
3 months ago
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| Question | Answer |
| Amortization | Process of paying back a loan (principal plus interest) by equal periodic payments |
| Amount financed | Cash price less 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 divided by number of days in billing cycle |
| Cash advance | Money borrowed by holder of 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 advances + purchases - payments |
| Deferred payment price | Total of all monthly payments plus down payment |
| Down payment | Amount of initial cash payment made when item is purchased |
| Fair Credit and Charge Card Disclosure Act of 1988 | Act that tightens controls on credit card companies soliciting new business |
| Finance charge | Total payments- loan cost |
| Installment loan | Down payment +( number of payments x Monthly payment). also called deferred payment |
| 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 specified maximum, a minimum monthly payment is required, and interest is charged on balance |
| Truth in Lending Act | Federal law that requires sellers to inform buyers, in writing, of the finance charge and the annual percentage rate. The law doesn't dictate what can be charged |
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